Ladies and gentlemen, thank you for standing by and welcome. At this time, all participants are in a listen-only mode. Following the presentation, there will be a question-and-answer session. Please be advised that today's conference call may be recorded. I would now like to hand the conference over to Tiffany Aldrich, Associate Director, Corporate Communications at Esperion. Please, go ahead.
Good morning, welcome to Esperion's third quarter 2022 financial results and company update conference call. I'm Tiffany Aldrich, and I'm part of the corporate communications team here at Esperion. 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 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 1st, 2022.
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 this morning detailing the contents of today's call. A copy can be found at www.esperion.com within the Investors and Media section. We will begin with prepared comments and then open the call for your questions. Following today's call, the team will be available for follow-up questions. Please email corporateteam@esperion.com to schedule a time to speak with the team. With us today are Sheldon Koenig, President and CEO; Dr. JoAnne Foody, Chief Medical Officer; Eric Warren, Chief Commercial Officer; BJ Swartz, Chief Business Officer; and Ben Halladay from our finance department. I'll now turn the call over to Sheldon for some prepared remarks. Sheldon?
Thank you, Tiffany, and good morning, everyone. Thank you for joining us today to review our recent progress in the third quarter of 2022 and reaffirm our goals for the remainder of the year. This is an exciting time for Esperion as we focus on CLEAR Outcomes. The entire organization is working diligently on executing quality site closeout and ensuring accurate data collection. In October of 2022, we completed the last patient, last visit in the study, which is another important milestone, and we are on track to report a brief top-line announcement in January 2023. We are targeting to present full comprehensive results with Dr. Steven Nissen, the lead investigator of CLEAR Outcomes, at the American College of Cardiology 72nd annual scientific sessions in March 2023.
While we await the results of CLEAR Outcomes, we have delivered on our promise to drive consistent growth while maintaining organizational efficiencies. U.S. net product revenue grew 28% year-over-year to $14 million in Q3 2022, while selling, general, and administrative expenses were lower by 36% year-over-year. Additionally, we have reduced spend by $74 million in operating cash thus far in 2022 compared to the same period in 2021. Esperion continues to operate with a limited commercial footprint following last year's reorganization as we anticipate our commercial spend having a greater impact after the full data readout. This quarter, we are also pleased to announce that bempedoic acid was recommended as an important oral non-statin therapy for LDL cholesterol lowering by the American College of Cardiology.
This ACC recommendation reflects an important management strategy for individuals with ASCVD and underscores the value of using NEXLETOL and NEXLIZET to achieve LDL cholesterol goals in high-risk patients. The CLEAR Path 1 pediatric clinical trial began activating sites in August 2022. CLEAR Path 1 is a phase II clinical trial investigating bempedoic acid in patients six to 17 years of age with heterozygous familial hypercholesterolemia. Our partner, Daiichi Sankyo, continues to report strong NILEMDO and NUSTENDI growth in their European territory and have treated over 64,400 patients in August. Daiichi Sankyo also presented new data at the European Society of Cardiology Congress in August from its multinational prospective observational study, SANTORINI, demonstrating a persistent need among eligible patient populations to attain guideline-recommended LDL cholesterol levels.
Simulation study results further indicate that the addition of bempedoic acid on top of ezetimibe could result in significantly more patients achieving recommended LDL cholesterol goals, potentially reducing their risk of cardiovascular events. Finally, we are pleased to invite you to our upcoming R&D day on November 9, 2022. We have two world-renowned scientific experts joining us for the event, Dr. Peter Libby and Dr. Michael Gibson. We're excited to hear their insights on CLEAR Outcomes and our pipeline. The upcoming CLEAR Outcomes readout represents the beginning of a significant inflection point in our growth trajectory. A successful study has the potential to expand our current labeled indication, making bempedoic acid the only oral LDL lowering therapy since statins to be indicated for cardiovascular risk reduction.
Importantly, a positive outcome study has the potential to transform cardiovascular disease management for millions of patients around the world who are struggling to meet their LDL cholesterol goals. Earlier today, we issued a press release containing our financial results for the third quarter, which is available on our investor website. U.S. product revenue for the third quarter ended September 30th, 2022 was $14 million, up 28% year-over-year, and $40.9 million for the nine months ended September 30th, 2022, up 47% year-over-year. Retail prescription equivalents for the third quarter were in line with our expectations, growing 2.4% quarter-over-quarter.
Royalty revenue for the third quarter ended September 30th, 2022 was $1.6 million, up 33% year-over-year, and $4.2 million for the nine months ended September 30th, 2022, up 50% year-over-year. We expect our partner to continue launching NILEMDO and NUSTENDI to new markets in the next year. Combined royalty and partner revenue was $5 million for the third quarter ended September 30th, 2022, an increase of 43% year-over-year, and $15.8 million for the nine months ended September 30th, 2022, a decrease of 55% year-over-year. The decrease for the nine months ended September 30th, 2022 is due to a one-time milestone payment from our collaboration partners in the second quarter of 2021.
Finally, total revenue for the third quarter ended September 30th, 2022 was $19 million, an increase of 32% year-over-year, and $56.7 million for the nine months ended September 30th, 2022, a decrease of 10% year-over-year. The decrease for the nine months ended September 30th, 2022 was due to the aforementioned one-time milestone payment. Turning to expenses. R&D expenses for the third quarter ended September 30th, 2022 were $29.1 million, an increase of 15% year-over-year, and $85.9 million for the nine months ended September 30th, 2022, an increase of 10% year-over-year. The increase is primarily related to an increase in CVOT costs as we achieved 100% MACE accumulation and continued closeout activities.
SG&A expenses were $25 million for the third quarter ended September 30th, 2022, a decrease of 36% year-over-year, and $84.9 million for the nine months ended September 30th, 2022, a decrease of 42% year-over-year. These decreases reflect savings from the transformation for long term success plan implemented in Q4 of 2021. As of September 30th, 2022, cash equivalents, restricted cash and investment securities available for sale totaled $239.3 million compared with $309.3 million on December 31st, 2021. We currently anticipate that our cash runway extends beyond the anticipated completion and readout of CLEAR Outcomes. Our operating expense guidance for the full year 2022 remains unchanged.
We continue to anticipate full year 2022 R&D expenses to be between $100 million-$110 million and SG&A expenses to be between $120 million-$130 million. These estimates are inclusive of approximately $25 million of non-cash stock based compensation expense expected to be incurred during this year. To close, as an organization, we are committed to helping providers and patients reach their goals, not only today with our approved products, but in the future with CLEAR Outcomes and additional pipeline programs. We look forward to updating you on our progress as we near a critical milestone in our journey and continue to help address the leading cause of death worldwide.
You will see the longer term vision for our pipeline at R&D Day on November 9th, and we will be making a presentation at Jefferies London on November 16th. Thank you all for joining today and for your continued support and interest in Esperion. Operator, we are now ready for Q&A.
Thank you. As a reminder to ask a question, simply press star one one on your telephone. One moment for our first question, please. Our first question comes from the line of Mike Yee from Jefferies. Please go ahead.
Hey, Sheldon, it's Mike. Good morning. How are you?
Hey, Mike. Good, thanks. Great to hear your voice.
Great, good. Congrats on the progress and the updates. Maybe just two from us. You refined the timing or were more specific about a January, early January release. You were pretty clear about a very short statement on the top line, I guess, positive or negative as it relates to the cardiovascular outcomes study. Can you just confirm whether you would qualify or characterize the results in any way to help people out, whether they'd be clinically meaningful or you would literally say nothing, just positive and see you in March? The reason I ask is just to help because, you know, there are different degrees of positive data to interpret the results. So that's question one.
The second question is related to the milestones and the cash position, assuming you would not raise cash until we had the presentation. Were there warrants that were issued in the quarter? Tell us about any other opportunities throughout 2023. Thank you.
Sure, will do. Let me start. I'll answer the first part of the question, and I'll turn it over to Ben Halladay to answer the second part of the question as it relates to financing. As it relates to the top line, I think, our strategy, you know, we're still considering exactly, you know, to your point, what type of modifiers we might add. You know, we won't be speaking specifically to a hazard ratio. We won't specifically speak to essentially any type of statistical significance, the P value, et cetera. The reason for that, just as a reminder, is, of course, you know, we've mentioned specifically we'll be presenting at ACC. We don't want to break our embargo. We're also targeting to hopefully publish a simultaneous publication in a top-tier journal at the same time.
That's the reason for, you know, somewhat being, you know, providing information, but not providing all of the details. As it relates to using words like clinically meaningful, things such as that, we are considering that. You know, once, of course, we have data, we'll have, you know, we'll apply those strategies, you know, when we actually issue the top-line. Ben, do you want to speak to the question regarding financing as it relates to warrants and other financial or financing activities?
Yeah, good morning. Thanks for the question. Let me start by saying we are very happy with our current cash and funding position. You know, we ended the quarter very strong from a cash standpoint. As far as warrants, we have not had any of those exercised at this time, but we are actively keeping an eye out for those. That would be a pretty significant tailwind for us. Just a reminder, it's $309 million that would come into the company. As far as looking to 2023, you know, outcomes and publication is a major catalyst for this company. Obviously, that's going to put us in a very good position to assess what our options are.
You know, with the milestones, you know, we'll know what those are, we'll know when those are coming in. I think that'll just kind of open up what we can possibly do from any fundraising in 2023. You know, we'll look to do basically what makes the most sense for us then.
Great. Thank you, guys.
Thanks, Mike.
Thank you. One moment for our next question, please. Our next question is from the line of Serge Belanger with Needham & Company. Please go ahead.
Hi, good morning.
Hey, Serge.
I guess, one question. Hi, just one question from us. You've previously talked about some pretty significant milestones associated with the CLEAR Outcomes trial. Can you just talk about what triggers these milestones? Do you need to reach a certain hazard ratio or risk reduction? Or is it just inclusion of a label expansion? Thanks.
Yeah. As it relates to the milestone, just as a reminder, it's a milestone with Daiichi Sankyo, up to $300 million. We have a separate milestone payment of up to $150 million with Otsuka. In order to actually achieve that milestone as it relates to Daiichi Sankyo, it's to include the CLEAR Outcomes data in the label, the European label. You know, that's where we are. Again, it's based upon the study results. The study, again, as a reminder, is powered for, you know, 15% residual risk reduction. It's 90% powered for that. It's essentially the data from the CLEAR Outcomes study, you know, being included into the label.
JoAnne, do you have any further comments as it relates to that?
Sheldon, one, just to clarify, Serge, and that's the European EMA label. No other comments, and thank you for the question.
One moment for our next question, please. Our next question comes from the line of Jessica Fye with JP Morgan. Please proceed.
Good morning, guys. This is Na Sun in for Jessica Fye. Congratulations on the progress. One question from me. Ahead of the CLEAR Outcomes data, what is your market research telling you in terms of what level of residual risk reduction the physicians are actually looking for? I know your base case is a 15% risk reduction, but what is a home run scenario? What kind of uptake can we anticipate from that? Thanks.
Before I turn it over to our Chief Commercial Officer, Eric Warren, who's done a lot of work in this, just one thing I do want to say is that we believe achieving a 15% residual risk reduction of which the study is powered for will be a significant achievement for the organization. Eric can talk about the other thresholds that we also tested. Eric?
Thank you, Sheldon, and thanks for the question. Just to keep it simple, 15% was deemed highly significant from our clinicians in our market research. 15% very meaningful and has significant impact from a market share perspective as well as a market access perspective in terms of quantity as well as quality of access. Now, anything greater than 15% would create incremental value. I just want to be very clear that at the base level of outcome, 15%, we have incredibly significant value. Thanks, Eric.
Thank you. One moment for our next question. Our next question comes from the line of Tom Shrader with BTIG. Please proceed.
Good morning. Thanks for taking the question. ClinicalTrials.gov is incredibly sparse on details on this trial. There are no secondaries listed. Is that accurate? Does that limit your ability to get other aspects into the label? And what I'm particularly interested in is how much Type 2 D or Type 2 diabetes progression data are you collecting? And do you think you can get that in the label? And then finally, with no statin in the control arm, do you think the best case for diabetic progression is equal to control arm? Thanks.
JoAnne?
Tom, thank you so much for the question. To your point, ClinicalTrials.gov just gives really a very basic overview of the trial. That being said, we have plenty of other secondary endpoints, importantly to your point, for both glycemic control in diabetics as well as progression to new onset diabetes. Not having it in ClinicalTrials.gov does not in any way preclude a regulatory conversation for that. It is our hope, and we anticipate that important glucose information, whether it be glycemic control or progression to new onset diabetes, would be included in the label, obviously pending results. We believe that that's a significant differentiator for the large proportion of patients with either diabetes or pre-diabetes. In CLEAR Outcomes, that constitutes 70% in total of our population.
Now, with respect to the second component of on a statin, not on a statin, remember that CLEAR Outcomes does focus on patients not able to tolerate statins, but also includes 20% of patients not able to maximize their statin. We will have a significant number of individuals who are on a background statin, as well as diabetic based on or pre-diabetic based on the numbers. We think we'll have important clinical information for pre-diabetics, diabetics, with or without statins, and include that information in the label.
Great. Thank you.
Thanks, Tom.
Thank you. One moment for our next question, please. Our next question comes from the line of Jeff Hung with Morgan Stanley. Please go ahead.
Hi, this is Mike Riad on for Jeff Hung. Thanks for taking our two questions. First, could you talk about your current thinking and expectations on the cadence for increased adoption of NEXLETOL and NEXLIZET sales? Do you expect, like, a fairly quick inflection in sales following this full data presentation, or do you think it would be more gradual and take longer? Our second question is what are you hoping to see during the CLEAR Path-1 pediatric clinical trial, and how could that data be implemented in the label? Thanks so much.
Sure. Eric, if you could take the first part regarding sales and then JoAnne, if you can speak to the pediatric trial.
Great. Thanks Mike for your question. The answer is pretty straightforward again. Growth will start with the release of the data. We will see the increased growth. As you know now, we've been committed to delivering consistent growth, and we've been doing that while conserving dollars for post-CLEAR environment. CLEAR data come out, we increase the level of growth that we're capable of delivering. Then when we have the label, which will happen in the first half of 2024, we expect to achieve even further or accelerated levels of growth. JoAnne?
Thank you, Jeff, or Mike, I guess, for the question. With respect to CLEAR Path-1, this is a pediatric trial focused on individuals or children with familial hypercholesterolemia. This is really, as we know, a genetically modified disease that runs in families. Our hope is that we can provide another oral option for these children that ultimately are at very high risk over their lifetime for cardiovascular disease. With respect to a label, we would assume a pediatric indication and the potential to also increase our patent life with the study. The real key is that this is a group of individuals with very high unmet need, and there are no other oral options for these individuals, and we hope to add to the armamentarium for children.
Mike, I just wanted to add one more thing as it relates to growth. You know, since we actually did our plan of-
Savings and transformation last October, one thing we committed to was, of course, you know, not only preserving our burn rate, but also demonstrating continuous growth throughout the year, the year defined as 2022. As Eric has mentioned, and as we have mentioned in our prepared remarks, this is with a very small footprint. We've been very pleased with the fact that we've been able to deliver on what we said that we would deliver on, and we'll continue that. You know, the second part of that is the fact that we've also always stated that CLEAR Outcomes and getting, you know, the label will be a significant inflection point for the organization. Thank you again for your question.
One moment for our next question, please. Thank you. Our next question is from the line of Joseph Thome with Cowen. Please go ahead.
Hi there. Good morning, and thank you for taking our questions. Maybe the first one, I know the study was fully enrolled ahead of any impacts from COVID, but maybe what additional information have you been able to glean during the conduct of the trial to make sure that COVID didn't have a substantial impact in either the overall trial conduct or the interpretation of the results? That'd be helpful. Maybe, just to follow up a little bit on Mike's first question, you did mention potentially indicating clinical meaningfulness in the top line release. Is your interpretation of clinical meaningfulness that 15% residual risk reduction, or is there potentially another interpretation? Thank you.
JoAnne, do you want to speak to the COVID?
Absolutely. Good morning, Joe. Thank you for the question. You know, as a large randomized global trial of over 14,000 patients, we would expect that the randomization would handle any confounding addressed by COVID. We are certainly blinded with respect to any of the events, but in fact, the events continue to track across the study population consistent with what we had predicted prior to COVID, suggesting that we don't have any particularly different accumulation of events or secondarily any difference in the proportion of events. Again, we've been tracking this very closely, as have the regulators, and we've been in conversations with them, and we don't see anything significant with respect to COVID that would be out of proportion or a concern.
Thanks, JoAnne. Joe, regarding your second question. I wasn't sure if it was the first or the second of the top line. If we were to use words such as clinically meaningful, what does that necessarily mean? You know, I think, you know, to us, it's the fact that, you know, if it's clinically meaningful, then there's obviously statistical significance. I think that's one way to think about it.
Okay, perfect. Maybe just one more quick one, because I know the drug does also lower C-reactive protein. Is there any way, based on literature, to sort of uncouple the CV benefit specifically due to C-reactive protein lowering versus LDL reduction? Or how should people best think about that? Thanks.
Joe, thank you again for the question. You know, we believe the anti-inflammatory effects of bempedoic acid are clinically relevant and meaningful. I think the best way to think about this is to look to a study like the CANTOS trial using canakinumab, which had only an anti-inflammatory effect and was able to significantly reduce cardiovascular events. We also know that statins reduce C-reactive protein, and so some of their event reduction is because of that. Importantly, we also know that PCSK9 inhibitors and ezetimibe do not have significant effects on CRP. Perhaps this is why PCSK9s underperformed relative to their LDL reduction. I think those are all ways to think about it. I also encourage you to take a listen to our research and development day on November 9 th.
Peter Libby, really one of the world's experts in the linkage between inflammation and cardiovascular disease and beyond, will be speaking with respect to inflammation and its potential across multiple disease states. I think you'll find that helpful.
Perfect. Thank you very much.
Thank you. One moment for our next question, please. Our next question comes from the line of Jason Butler with JMP Securities. Please proceed.
Hi. Thanks for taking the questions. You broke out the number of hard ischemic events in the presentation, and that's helpful. Can you just maybe comment on whether the rate of those individual events was in line with your expectations from the study design? How well powered you are to hit statistical significance on any of the components on a standalone basis, most specifically cardiovascular death? Thanks.
Thank you so much for the question. As you mentioned, we've accumulated for our MACE-4 over our 1,620 anticipated events, thereby allowing us to have our 90% power for a 15% risk reduction. With respect to components of the composite and the numbers, we do not have them specifically.
However, I can tell you that if we look at our MACE-3, which is predominantly the harder events, because it doesn't include coronary revascularization, we are nearly at 140% of those events with very significant power around all of those, and that is stroke, MI, and death. I can't give you specifically with respect to death, although I know that that's your question, but I think you should have confidence in the fact that our MACE-3 is well above the pre-specified number, giving us much greater power on those harder events.
Okay, great. That's helpful. Just on the commercial side, can you speak at least broadly to the steps or how you gate the commercial build-out after the top line, then the full data and ultimately label expansion?
Yeah, Jason, it's Eric. Thanks for the question. At this current point, our sales force is relatively modest, less than 80 individuals. We've been working very closely with ZS Associates now to come up with a staging plan that optimizes the impact of those individuals, but helps from a runway preservation perspective as well. Rest assured, we have a robust plan in the works that will create expansion. At this point, I'm not gonna provide the specifics of that.
Okay, great. Thanks for taking the questions.
Thank you. One moment for our next question, please. It comes from the line of Judah Frommer with Credit Suisse. Please proceed.
Good morning. Thanks for taking the questions. Just kind of following up on the last one, maybe asking it a little differently. Regarding the marketing message after a potential positive CLEAR Outcomes trial, how would that be different versus the initial launch of bempedoic acid, which obviously happened during a difficult time? Would you focus largely on the CLEAR Outcomes benefits, or would there also be a message that's similar to what the drug was launched with a couple years ago?
Yeah. Thanks, Judah Frommer. It's Eric Warren. Yeah, I can start and then JoAnne Foody could layer on to this. When the product was or the products were launched initially, there wasn't a lot of specificity, and obviously the label is somewhat limiting. The label aligns with ASCVD patient on maximally tolerated statin, provides LDL-C benefit, but has a very clear limitation that there is no outcomes benefit or no effect on morbidity and mortality. In a world with clear outcomes, obviously we're able to really enhance the message. Having that outcomes message integrated into our clinical discussion adds significant value, as I mentioned from the market research.
We also anticipate losing that maximally tolerated statin limitation, which is a pretty significant limitation for us. Enhanced clinical messaging losing the limitations. Also, this translates into payers, you know, and their willingness to not only enhance the percentage coverage, which is good now, but to enhance the quality of coverage and to make that utilization management align with the enhanced label that we anticipate. Hopefully that's clear. JoAnne, if you wanna provide any additional, that would be great.
Yeah. Judah, I think, you know, as we look to this, right, CLEAR Outcomes combined with all the lifecycle management research that we've done gives us a label that is really quite simple. We would aspire to a label that would be for individuals at risk to lower LDL cholesterol to reduce events. I think as Eric mentioned, it allows us to be much more expansive, allows us to have this drug where clinicians wanna use it as an early oral therapy to reduce LDL cholesterol and events. I think what's important, I think many of you have asked about an inflection and we can see that this is much more consistent with the existing ex-U.S. label that doesn't include maximally tolerated statins.
If we take a country like Germany, for example, with that kind of a label, they've already cumulatively outstripped all of PCSK9 utilization in the country. I think that this is really a label that is clinically relevant, I think commercially much easier to market to, and one that providers and patients I think will provide the most benefit.
That's helpful. Thanks. Then just a quick question on the potential Daiichi milestone. The language is up to $300 million. Is there anything you can share with us regarding, you know, how you get to the full $300 million aside from inclusion in the European label?
Yeah, Judah, we've never disclosed how to get to the additional $100 million. It's really the specific aspects of the study that we haven't made public as of yet.
Got it. Okay. Thank you.
Thank you. Our last question. One moment, please. Our last question comes from the line of Paul Choi with Goldman Sachs. Please proceed.
Hi. Good morning, and thanks for taking our questions. My first is on just what your market research suggests or indicates as to what uptake might look like among clinicians if the primary endpoint is, you know, primarily driven by lower rates of cardiovascular revascularization versus sort of the hard MACE endpoints. My second question is with regard to the pediatric heterozygous familial hypercholesterolemia trial, can you maybe just give us some guideposts on as to what your regulatory feedback has been like and just sort of what rough timelines might be for completion of that study or in that population in order to get the pediatric exclusivity for a additional six months of patent life? Thank you.
Yeah. Eric, before you go, thanks, Paul, for the question. You know, one of the things I think we really struggled with, and it kinda goes to the last question too, was overall awareness of these brands. More and more, you know, we're starting to see, and even in our prepared remarks, we've talked about the fact of the inclusion of NEXLETOL and NEXLIZET or the bempedoic acid franchise in guidelines. We're seeing more and more the opinion leader, scientific leaders throughout the United States, obviously throughout the world, also speak about these products and where they fit. I think that's a good segue of what Eric's been seeing, in his market research that he conducted and a potential uptake once we have the CLEAR Outcomes. Eric?
Yeah. Thanks, Sheldon. Thanks, Paul. Paul, with regards to the primary endpoint, MACE-4 is what we've evaluated. That 15% base level of impact, if you will, is what we've anchored our research around. We've provided, you know, kind of incremental profiles, if you will, to assess changes in value. I'll just say that, you know, again, with a MACE-4 benefit equivalent to a 15% relative risk reduction, we see very significant multiple fold improvements in market share or penetration. We also have that significant payer benefit. We've tested that not only in quantitative and qualitative research, but we've also tested that with a payer advisory committee.
JoAnne, you wanna comment on the pediatric component?
Yes, absolutely. Thank you for the question. As was mentioned, we've started our first patient in the study. As you all understand from our CVOT, these trials can take time, although this one won't take that long. We're anticipating a 2026 presumably opportunity to file. With respect to conversations with the regulators, they have been quite pleased with the study design, with the targeting and the opportunity for us, for a label update as well as potential EU updates.
Great. Thank you very much.
Thank you. Ladies and gentlemen, with that, we conclude our Q&A and conference call. Thank you for participating, and you may now disconnect. Good day.
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