Morning, everybody, and happy Monday. I'm Serge Belanger, one of the healthcare analysts at Needham. Welcome to our 24th Annual Healthcare Conference. For our next session, we have Sheldon Koenig from Esperion Therapeutics. We're going to be doing a fireside chat. We can take Q&A. For those listening online, there is a portal to submit questions. I'll ask them as they come in. Maybe I'll hand it over to Sheldon to give us a quick overview of the company and recent developments, and then we'll go to some questions.
Yeah, great, Serge. I don't know if I'm your first one this morning on a Monday morning, but here at Esperion, we really appreciate the opportunity to have this fireside chat. On behalf of all the employees, thank you. Just really quick about the company. We're currently marketing two products on the market: NEXLIZET, Bempedoic acid plus Ezetimibe, and obviously also NEXLETOL. In our last quarter, we talked about our strategy moving forward, so 2025 and beyond, and that is to maximize this franchise, of course, number one. Number two is our pipeline. Again, just a reminder, April 24 is our Research and Development Day. We might get into that a little bit later. In a couple of weeks, we'll be there in New York. I would say two A to that is how do we make this company bigger?
We are being very aggressive in our business development and doing a landscape analysis and looking at different opportunities. The third and final is achieving profitability, which, as my partner, Ben Halladay, would say, our Chief Financial Officer, you know, we're going to get there sooner than people think. That will be also another exciting milestone for us. That is just a quick snapshot of who we are and how we're looking forward.
Great. Just to start off with, you know, one of the topic du jour the last couple of days has been tariffs. No pharmaceutical products are exempt, at least so far, but curious if we were to see some tariffs on those products, what could be the impact for Esperion?
Yeah, definitely the hot topic. I was at a birthday party, actually, this weekend, and people were discussing tariffs. I think everyone thought that last night, you know, Trump would have come out and maybe rolled some things back, but that hasn't happened. From looking at the futures, it looks like it's going to be another rough day. For tariffs, again, to your point, Serge, we currently are being spared the entire pharmaceutical industry, but who knows? This week, next week, we could see tariffs on the pharmaceutical industry. The good news for Esperion is the fact that 50% of our manufacturing is already done in the United States. Now, our API is actually sourced from France and India, but we actually have already a U.S. supplier. If we need to pivot and go to that U.S.
Supplier for API, that would even limit our exposure even more. We feel pretty confident that we have a plan. We were looking to do these types of steps, the alternative in the U.S., you know, even before, you know, Trump ran for office and came into office and announced tariffs. We do not really see any true impact on us as it relates to tariffs. Again, something that, like you, we will be closely monitoring and we will be able to pivot accordingly.
Okay. I know one of the big focuses for 2024 was on, well, first getting your label expanded to reflect the Clear Outcomes Trial and then updating the formulary coverage to reflect that new label. Maybe just give us an overview of where those efforts are and how that sets up 2025.
Yeah, so we've come a long way now that we've been out with our label, probably, you know, I guess, as of last week, a year. So a year. Keeping in mind when we did the field expansion last year, people didn't really hit the ground running until June. We've come a long way. 95% commercial coverage, 65% Medicare coverage, all preferred status, which is extremely important. Just a couple of facts. We actually have, you know, many plans that have actually moved away from even having prior authorizations, which, as you know, was a very big headwind for us. We might get into some of the step edits also that have been removed. Currently today, Caremark, SilverScript, no prior authorization. Aetna, no prior authorization. Here's a late breaker for you. Optum, starting May the 1st, over 8.5 million lives, no prior authorizations will be necessary.
We're in the middle of negotiating another big one that hopefully we can update you soon, which will also require no prior authorizations. That's a huge step for a branded product. There's not many branded products out there, and you know, you cover a lot of them that can say they don't have a prior authorization. Just a few more things. You know, it used to be that the physician and the staff had to provide a lot of evidence to get patients on our medications. That's not necessary anymore. Now it's more physician attestation. It's a physician saying a patient's already been on a statin for six months, and we can just move them to NEXLIZET or NEXLETOL. That removes a barrier for the office staff.
The biggest headwind that we had before we had our new label was the fact that, as you know, we had to go through Ezetimibe before we were used. That is also gone. No longer is there a headwind where a physician has to go through that Ezetimibe step edit or multiple statins. It's either a statin, or if a patient cannot take a statin, they can go on our drug alone.
Okay. In terms of product positioning, where does that put Bempedoic acid? I think in the past, it was, like you said, once you were past Ezetimibe, it was either NEXLETOL, NEXLIZET, or one of the PCSK9s. Where has that changed in terms of the product position?
Yeah, so the beauty for us is, again, keep in mind that we are the only oral and only non-statin that's both indicated in primary and secondary prevention. Very important. I think we're going to talk about future products later. We're the only ones that have studied a population in both of those areas and have an indication. We obviously are promoting our primary and also our secondary prevention message. Where does Bempedoic acid fit in that journey of physicians? The good news is, because of our broad label, they have options. One, if they have patients who can tolerate a statin and they need more efficacy, you can add Bempedoic acid. You can add NEXLIZET or NEXLETOL.
For a patient who cannot take a statin, and by the way, the National Lipid Association just recently came out with a publication that showed up to 30%, three-zero, 30% of patients are statin intolerant. What does that mean? They either cannot take a statin at all, or they can only take a certain dose of their statin. The physician now has the ability to do more. We found in research, even years ago, physicians are frustrated, even with the products that are out there, that they could not do more, and now they can. We are seeing that they are responding to that message. If you are statin intolerant, you can take this drug if you want to add it to a statin. We have always showed a slide. We are not showing slides today where it was statin was the foundation, and then it was us.
We'd say we were next, and then PCSK9. Why do we say that? Because 70% of the adjunct market, and the adjunct market is described as anything non-statin, 70% is Ezetimibe. Our whole message is, you know, you can upgrade now to outcomes. You know, we have outcomes. Ezetimibe did the IMPROVE-IT trial, but they didn't have the outcomes. Now we've got the best of both worlds combined. Doctor, why don't you take your patient who's just on Ezetimibe with a statin, upgrade with this other drug where you have proven outcomes, and that's where NEXLIZET fits.
Have the treatment guidelines been updated now that the label of Bempedoic acid has been updated, and we have the Clear Outcomes Trial that's been out for almost two years now or three years?
Yeah, so we thought actually treatment guidelines were going to be updated in November of 2024, and then we were told that they'd probably be more like the end of 2025, and now we're being told that it's in 2026. You know, we're waiting anxiously like everyone else, but there's smaller associations, for lack of a better word, professional associations that essentially have put out, you know, consensus papers, for lack of better words. I think, you know, what they've noted is what I've just said, is that, you know, we are really the only non-statin that's been indicated in primary prevention. We're a, you know, a first step there along with statins. You know, we're anxiously awaiting what those, you know, what those guidelines are going to show.
The good news is, is that you've got payers out there that just based upon the Clear Outcomes Study alone, they've made these decisions that you and I have just talked about. They see the value of the clinical message. They're not even waiting for guidelines. We have found that with physicians as well. I think lipid lowering, you know, since the introduction of lovastatin in 1991, you know, physicians have an idea of what they need to do: lower LDL cholesterol, lower events. How can I do that as best as possible?
Okay. In terms of the commercialization focus, like we've talked about the label and the expanded formulary coverage or the improved formulary coverage, what is the focus now? Is it just increasing awareness of all these things? Yeah, what is that focus currently?
It is definitely, just to give you some tidbits on awareness. Unaided awareness right now for NEXLIZET is 50%. Unaided awareness for NEXLETOL is 60%. That is without anyone talking to them. When you get to aided awareness, they are both at a 95% percentile. Now it is about prescribing more. It is really about depth of prescribing. You know, we talked about the access that we have in managed care. Physicians are realizing that getting this drug is easier. That is extremely important because that was a cloud that I think hung over prescribing for a while. Our competition tries to get out there and try to make that it is harder, but it is really not. As a matter of fact, we pay for a service that looks at prior authorizations.
If you look at the number of prior authorizations needed versus, let's say, for example, a PCSK9, we're much less than PCSK9. That gets back to what I said earlier. That's because a lot of plans are not even requiring prior authorizations. That also has to do with our cost. We're less expensive than a PCSK9. When you look at copays, on average, we're $46. In Medicare, they're $80. Commercially, we're $35. They're closer to $50 from a copay perspective. Real advantage for us there also in our messaging to physicians.
Remind me again the current size of the sales force. Maybe if you can talk about whether this is still a part of the vascular market or, you know, how much of it lies within the PCP segment.
Yeah, so our sales force is 155 representatives. It's 150 representatives and five key account managers. One new addition that I want to put out there, it's separate from sales. It's a firewall. We also implemented last week 15 field reimbursement managers. We have 15 regions. We have one field reimbursement manager for each region. These folks are integral in helping physicians understand the process of how to get our drug, understand the reimbursement dynamics, also get that message out there that it's easier than what it was in the past. From an account perspective, we have basically two key account managers who were successful in getting all those wins for us, only two. We feel really good about the 155 representatives. Just to break down some numbers for you, that allows us to call on over 20,000 physicians. So live promotion.
The majority of those physicians we're calling on are primary care physicians, about 11,000, followed by cardiologists, about 9,000, and then endocrinologists, 1,000. That is 20,000 physicians. These are all high prescribers of Ezetimibe and statin. You can see how we're targeting. If you look at what we're doing from a digital perspective, we're able to reach an additional 70,000 physicians out in the United States. It is probably that same distribution between primary care and cardiologists. I would say five years ago, when you talked about digital promotion, maybe six years ago, it was, you know, kind of this pie in the sky. Is it really going to work? Ever since COVID in 2019, 2020, what we have found, and even looking at our return on investment, digital promotion goes a long way. We have found that balance.
We've said this before, that balance between personal promotion and digital promotion. Those days of having sales forces of 1,000, 2,000 people, it's not even worth it because half those people can't even see a physician. The offices are closed, but they're not closed to digital promotion. Lastly, because I don't want to forget it, consumers are really driven as well. They're activators for this drug. We've actually found in research when a consumer hears a message and they go into their doctor and they ask for NEXLIZET or NEXLETOL, they get it every time. That's another area that we've been focused on. You'll see our Lipid Lurkers again in New York when we're there for R&D Day. It's a campaign that we're actively running across social media.
Okay. I know this is not the forum to talk about one-queue numbers. We'll do that later this month or early next month. Maybe just if you can comment on the prescription volume and, you know, what we've seen recently.
Yeah, I think you put out a great report every week. I think what you've seen with not only our drug, but other drugs is, you know, we will show some growth. First quarter is always, you know, somewhat of a difficult quarter because of insurance, et cetera. We saw a dynamic that was occurring in the first quarter as it relates to confusion around Medicare. There was a lot of noise, you know, similar to the noise that you see with tariffs where that was implemented, but the noise around Medicare was not implemented. Consumers are really confused as it relates to the Inflation Reduction Act of how much their out-of-pocket expense was, how much their copay was. As you know, we're a relatively inexpensive drug, as I said earlier. Many of our patients are Medicare-age patients. They're taking six to eight drugs.
They have a $2,000 doughnut hole that they have to go through before their copays actually come down. They start prioritizing their medicine. Some of those medicines get them right through the doughnut hole. Some of them, it takes them two months to get through. We've actually seen the copays now coming down to the level that I mentioned earlier in our conversation. We're starting to see that momentum increase now as it relates to patients getting prescribed our drug, paying for their drug, and getting their drug. I think, you know, one thing that we've always promised is growth. It's always something we've delivered on in every single metric. We're going to continue to show growth. We have a lot of momentum for 2025 and a lot of, I would say, internal catalysts to continue our growth as we go through the year.
Maybe we can talk a little bit about ex-U.S. commercialization. Maybe let's start off with Europe and what Daiichi Sankyo has been able to do with the product.
Yeah, Daiichi Sankyo continues to show just extraordinary growth. In tough markets too, the U.K. is a market that is always very difficult to grow just because of the way that NICE handles reimbursement. I can tell you, I believe it's their second largest market next to Germany. You know, keep in mind again, and it really shows how Bempedoic acid is becoming, and I think will become a standard of care in physicians' paradigm. In Germany, you cannot use a PCSK9 unless you've tried Bempedoic acid, no matter what. That was something that AMNOG, which is a division of IQWiG, which is the HCA for Germany, implemented about a year ago. They're showing double-digit growth in Germany. They're showing double-digit growth in Switzerland, where they just launched, Italy, Belgium. You know, it's really an amazing story what they've been able to do.
The good news there is we do not operate separately from them. You know, we work as a team. We had a very good meeting in Miami in January. It was great weather. It was not cold in Germany. It was not cold on the East Coast. It was a collaboration around our medical messaging, our promotional messaging, what is working, what is not working. We had a similar meeting like that with our partners in Japan with Otsuka. The only reason why I bring that up is because I think when folks think about NEXLIZET and NEXLETOL, they think about it as just Esperion focusing in the U.S. The good news is, we have these mindsets in different parts of the world.
You know, almost, if you will, a global company, you know, using all of our resources to think about, you know, how do we better position the drug? How do we sell more of the drug? How do we get it to more patients? Daiichi Sankyo is just doing a great job. Obviously, you know, we benefit from that in many ways also. You know, very happy to see, you know, what they're being able to accomplish.
Remind me again what the arrangement is in terms of royalties. I think there was some manufacturing transfer that was underway.
Yeah.
Any update on that?
From a royalty perspective, we would receive anywhere between 15%-20% royalty from Daiichi Sankyo. Now, keep in mind, last year in June, we did a deal with OMERS where we basically sold the royalty rights. We actually, once that is satisfied, we will get those royalties back. I can tell you, we are, I think, ahead of schedule as it relates to how well Daiichi Sankyo is doing and what OMERS is receiving. We will be paying closely attention because once we reach that payback, those royalties come back to us. Now, keep in mind, that's just Europe. We also have the launch of our product in the ASEAN region. If you look at South Korea, Taiwan, Philippines, Thailand, Brazil, et cetera, we get 15%-20% royalty from these markets as well. It's a great story there.
As it relates to the tech transfer, that is going very well. We have two teams. Obviously, they have a team. We have a team. Our team was just in Munich, Germany last week, going over, you know, all the different stages for the tech transfer. I think we are on target to complete that when we need to be. You know, feel really good about the collaboration there. That is obviously going to help us from a financial perspective as well. You know, that was a big part of the settlement with Daiichi Sankyo. That was not even on the table. I mean, to me, that was just an incremental benefit of doing the tech transfer. Stay tuned for that. I think by the later half of this year, we will have an update of exactly where their progress is.
Okay. You also have Otsuka in Japan. I think we're expecting some important news from them this year.
Yeah, we're really excited about that. We had a great visit with them in December. They will launch their drug probably in the October and November timeline. Keep in mind, Japan is the third largest market in the world. And they're excited. I mean, they have like close to 600 people on this. Keep in mind, Esperion has 305 employees alone in the United States. They have 600 people in Japan working on this product. We actually have been invited to the launch meeting. You know, we're looking forward to it. That will be also a gateway for us to receive additional milestones. Up to $130 million in milestones from Otsuka. Again, that's something that will take place later, late third quarter, fourth quarter of this year.
Should we expect any additional international expansion of the franchise to other markets?
Yeah, so we had two exciting deals that we talked about. As you know, we signed an agreement with CSL Seqirus to actually market the drug in Australia. So CSL Seqirus, I actually just met with the Seqirus team about two weeks ago. They're in the process of submitting the application to the TGA, which is the Australian HTA, Healthcare Technology Assessment Group, stuff reimbursement market, but they know that market. You know, that's where that company is. And then in Israel, a small market, but again, just to show our global expansion. In Israel, we struck a deal with Neopharm, and they actually should be able to launch the drug hopefully by the end of this year. So we're always looking for, you know, there's still a few unpartnered territories. Obviously, Canada is always a big question.
We are currently in discussions with, I would say, several companies as it relates to Canada. In the meantime, you know, we took the initiative to go ahead and file in Canada so that we could get a head start on the HTA process so that a company coming in has a head start in marketing and selling the product. That is a big market. I mean, we did market research, and that market is in the hundreds of millions of dollars of opportunity. It is something that we are working hard on. You know, as always with any deal, you want to make the right deal.
Yeah. I think you have kind of an R&D investor event scheduled for later this month in New York. I do not want to steal any thunder from that upcoming event, but, you know, I've been following the company for a few years now, and it's mostly been a commercial-focused story. I think there was always a pipeline.
Yeah.
Pipeline work in the background, but mostly at the early stage. Did we see this R&D day as kind of a change in strategy for the company going forward?
Yeah, just a couple of things. I mean, it was always in the background because of our capital structure, right? We really could not do anything. We were handicapped. You know, I think getting out of the RIPA agreement, refinancing the converts created a whole different opportunity for us. Not many small to mid-cap companies out there are commercializing drugs and also have a pipeline that they can look to and develop. Our strategy is really a simple one. It is grow NEXLIZET and NEXLETOL franchise to the blockbuster potential that we know that it is. That is number one, always. Number two, what is the future of this company? Not to give you any thunder, but maybe to give you some lightning is that the future is really this, you know, these pipeline assets, one asset in particular that we will be talking about on April 24th.
We will talk about an asset and a specific indication on April 24th. That will be focused on liver. I'll just keep it at that. It's not NASH. We will also briefly just talk about our program in kidney. I think these are also very interesting partnering opportunities as well. There are many companies out there interested in what people are doing as it relates to fibrosis, liver, kidney disease, et cetera. There is a nice overlap if we think about our intellectual property. You know, we talk about these products coming in the early 2030s. As you know, we have intellectual property for the Bempedoic acid franchise until June of 2031. We think we have a really good strategy to get us to 2040. More to come later on that.
It's a real nice positioning of not just thinking about now, but how do we think about the future of Aspirin and how do we keep this company as a, you know, a going entity? That's why also adding something to the bag could be very important for us.
Okay. The last quarterly update, you unveiled these new triple combo products, adding NEXLIZET to some statins. Maybe just, you know, talk about those programs. I think the company had previously conducted studies with these triple combos. So here's what you saw back then and why is it now being.
Yeah.
I guess more prioritized than it was in the past.
Yeah. One, we thought it was going to be a heavy burden, a heavy lift from a financial perspective. We were actually under the impression that we were going to have to conduct a clinical trial for $30 or $50 million. In further research from a regulatory perspective, we do not need to do that. We just need to show bioequivalence of the parts. To your point, there is a phase two study that was done that looks at the addition of Ezetimibe plus Bempedoic acid plus atorvastatin. We showed anywhere between a 60%-70% LDL reduction. Think about that. That could be one of the most efficacious LDL-lowering drugs on the market. Again, it fits nicely. You know, when you think about just NEXLIZET alone, you know, we are really looking at two pathways to attack cholesterol.
We have the ACLY pathway, and we have the cholesterol absorption inhibitor pathway. That's what really makes, you know, this product unique is you're going down these two pathways. If you then even further that and you look at it from a statin perspective, again, you're adding more LDL lowering. You're adding more potentially hsCRP lowering because we know that statins lower hsCRP and they also lower LDL. And it's a perfect drug for those patients who can tolerate a statin and need more. Helps them be compliant. It's, you know, possibly two less pills, maybe three less pills if they're taking NEXLETOL. It's really a nice drug of convenience with great efficacy. We are really excited about it. You know, more to come on that as we continue to go through the development. It was really, we thought it was going to be cost-prohibitive.
We really kind of pushed and found out that it wasn't. Good news for us. It really opened another door for us.
Okay. You kind of hinted earlier about some interest in BD. Would that be another commercial asset or you'd be willing to get more involved on the R&D side?
Yeah, we definitely, for the BD, we're not looking for anything in the clinic. We're looking for something that is either on the market, soon to be on the market, has been filed to be on the market. You know, there's a lot of, I would say, single shingle companies out there that do not have an infrastructure. I think that's the beauty of Esperion. You know, we have medical affairs. We have a sales force. We have a compliance department. You know, we have all the things that you need to run a company. For companies out there that have filed drugs that, especially in this financial environment, do you really want to spend $50-$100 million to stand up a sales force or to stand up a sales force with medical affairs to do market development? We have that. We can do that.
We can help companies do that. I would go as far as to say is we've gotten a lot of inbound calls from companies who know that we can do that. Again, especially in this environment, the silver lining for us is we have that ability.
Okay. Let's talk about financials for a little bit. Maybe where you stand in terms of cash and the rest of the balance sheet and some of your priorities on the capital allocation front.
Yeah, so we ended the quarter with $144 million in cash. That was actually more than what we ended with in the third quarter. Obviously, we'll do an update when we do earnings. We feel good about our cash position. Again, you know, just thinking about what we did with our capital structure last year, I mean, imagine, you know, if that was like this year. Again, being ahead of the game has put us ahead of the game. We feel good about our cash position. I've talked about the milestones, obviously, but, you know, even, you know, putting that aside from a cash perspective, being able to do what we did last year with our capital structure was a game changer for this organization. That has set us up very well from a cash perspective.
Now, with that said, we are extremely careful with every dollar that we spend. You know, I get all the messages of, "Why aren't we doing direct-to-consumer? Why aren't we doing this? Why aren't we doing that?" That costs a lot of money. We have to be very careful with each and every dollar. You will still see us being very conservative on our spend, getting the most bang out of our dollar. Again, as I mentioned at the start of this call, the third objective, you could even make it the first objective because I think that is also true. They are all interchangeable, getting to profitability. That is where we want to get to. That is a priority.
Okay. You are expecting some additional milestones this year. That should help addressing some of the debt obligations.
Yeah, no question about it. You know, we have a $50-$55 million tab left on the convertibles. We have a strategy to address that. You know, looking at all sources, including our milestones. You know, we feel good about how to do that. You know, as we get later in the year when that comes due, you know, we'll talk about what that strategy is. Again, you know, we have a path for all these things. The reason why I hesitate a little bit is because last year, you know, while we were doing all the things with the RIPA and also the convertibles, that was a lot of work. It gave us a lot of freedom to think about, you know, how we can manage, you know, the debt that we have now.
Okay.
We'll probably talk about more of that in Q1.
Got it. On Friday afternoon, I think you guys put out news that your Chief Commercial Officer was departing. I do not know if there is any more color you can provide on that and whether you think of that as a sign that maybe other changes could happen.
Yeah, no, I mean, Eric, you know, decided to leave on his own. He's been here for four years and did a great job. Eric really likes to be in a position where he can build, help build companies, which is, you know, what he did here. Setting up the marketing strategy, setting up the sales force. Hasn't been announced yet where he's going, but he's going to a company that their product is still in development. You know, he's going to go there and help them build, you know, their marketing and sales force capability. All in good terms. You know, we wish him the best.
Okay. You'll be recruiting for a new Chief Commercial Officer.
We absolutely will be. We already have our recruiter lined up, and we'll start this week looking for a new Chief Commercial Officer.
Okay. Maybe just to wrap up, you can talk about if there is anything that you feel is underappreciated or just misunderstood about either the bempedoic acid franchise or just the company in general.
Yeah, I think with the company in general, I think a lot of people, you know, you know, look to the past and they think about, you know, when this drug first came out, you know, during the days of COVID. I'm here to say those days are over. You know, we set that message out when we did fourth quarter earnings. Need to think about this company as the future. I mean, look at all the things that you and I have just talked about, how far this company has come with these assets, a game-changing label, access that I don't think any of us expected the access that we've seen, the growth that we've been able to demonstrate. That's just going to continue.
The fact that we can actually have an R&D day and talk about a very exciting asset, which by the way, will play in a very large market, even though it will be an orphan indication, is no one had thought, nobody thought that was going to happen. You know, the thing that I get passionate almost to the point of a little like, you know, just really get out there. People view it as anger, but it's passion is they'll never get out of this RIPA agreement. They'll never be able to refinance the converts. They'll never get primary prevention in their label. They'll never achieve the reimbursement levels that they've done. They'll never show double-digit growth. We've done all of that and more. Why the stock price is where it is today? I think that's just because of the market.
Anyone that can forecast it differently, like let me know. I think once we get past these clouds, people are going to start realizing that. You are really going to see the fact that this company is severely undervalued. You know, it needs to be a higher value. We have shown reasons why and we will continue to show reasons why it should be.
All right. Great way to end this session. Sheldon, I want to thank you for spending time with us this morning. We appreciate all of your time.
Thank you. Good luck to the markets. Let's hope they swing back in the right direction. I really appreciate it. Thanks again, sir. I just appreciate your support and all the support that Needham.
Great. Have a nice day.
You too.