Esperion Therapeutics, Inc. (NASDAQ:ESPR) Q4 2023 Earnings Call Transcript
Esperion Therapeutics, Inc. (NASDAQ:ESPR) Q4 2023 Earnings Call Transcript February 27, 2024
Esperion Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.5, expectations were $-0.53. Esperion Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Esperion’s Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference call may be recorded. I would now like to hand the conference over to Alexis Callahan, Head of Investor Relations. Please go ahead.
Alexis Callahan: Thank you, operator. Good morning, and welcome to Esperion's Fourth Quarter and Full Year 2023 Earnings Conference Call. With us today are Sheldon Koenig, President and CEO; and Ben Halladay, CFO. Other members of the executive team will be available for Q&A following our prepared remarks. We issued a press release earlier this morning detailing the content of today's call. A copy can be found on the Investor page of our website, together with a copy of the presentation that we will also be referencing. I want to remind callers that the information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that management will be making forward-looking statements.
Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and in our SEC filings. The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, February 27, 2024. 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 will begin the call with prepared remarks and then open the line for your questions.
I'll now turn the call over to Sheldon Koenig, President and Chief Executive Officer.
Sheldon Koenig: Thank you, Alexis, and good morning, everyone. Thank you for joining us today to discuss our fourth quarter and full year results and a significant progress we continue to make. We are pleased to report another strong quarter as well as key material events in January that we believe put our company on solid footing and further position us for continued long-term success. Starting with our quarterly performance. Total revenue was $32.3 million, which represents a 72% increase year-over-year. U.S. net revenue came in at $20.8 million, which represents a 39% increase year-over-year driven by a 44% year-over-year increase in retail prescription equivalents. We believe the continued growth seen in both the U.S. and in our global territories is a testament to the strength of our clinical data, the unmet need in the market and our teams and partners' abilities to execute.
Listed here are several recent accomplishments worth calling out. We delivered another strong quarter that positions us for continued success in the long-term and significantly transforms our capital position and investment profile. Prescription growth continued at a strong pace, and we're proud of the momentum that we sustained through the end of the year. Additionally, we resolved our pending litigation with DSE and expanded our partnership on mutually beneficial terms. We further strengthened our balance sheet with additional capital, emphasizing our strong cash position and bringing in several new long-term biotech investors. Our label expansion approvals remain on track in both the U.S. and Europe. We published additional important data from our CLEAR Outcomes trial and we remain focused on preparation for our new label, expanding our commercial organization to ensure we're ready to fully capitalize on the opportunity when we receive approval next month.
On January 3, we announced the settlement agreement and an amendment to our collaboration with Daiichi Sankyo Europe, which marked the resolution of our pending litigation. Our settlement was mutually beneficial and reflects both parties' commitment to our on-going partnership to deliver our medications to patients worldwide and address global unmet need. Importantly, we believe the closure of this matter significantly strengthens our investment profile, reduces costs associated with the litigation and is an excellent outcome for both parties. It provides for a significant near-term cash payments, inventory and gross margin savings and potentially extend our European product life cycle while generating additional potential royalty streams in the DF territories.
The net result of all components of our agreement provides both near and long-term value and allows us to continue focusing on running our business. Combining our year-end cash balance with the $100 million settlement payment received in January and proceeds from our recent offering, we significantly strengthened our liquidity position, which enables us to invest in initiatives that support the long-term success of Esperion. With the litigation now resolved and the infusion of additional cash, we are poised for significant growth in 2024. Now let me turn to our upcoming label expansion, which we anticipate will include a new broad cardiovascular risk reduction indication, expand access to the primary prevention patient population or those at risk of an event, not just those who have already had one and removed the statin use requirement.
These are significant changes to our current label, supported by our robust CLEAR Outcomes data and are expected to drive substantial future growth. I'm pleased to share that reviews of our pending applications with the FDA and EMA are progressing extremely well, and these positive discussions remain in line with our strategic goals. We are on track with an FDA PDUFA date of March 31, with an expected decision by the EMA on our European label likely coming in the second quarter. Based on our existing label and narrow indication, our current addressable market is around 10 million patients in the U.S. Upon approval of our new anticipated label, our models predict an opportunity that triples to around 30 million patients. That figure, however, does not include an additional 40 million untreated individuals who are at high risk and who are still not at their LDL-cholesterol goal.
We see vast potential for our products to help millions more patients in the future, reiterating our eagerness for the FDA's anticipated approval. Today, I'd like to outline the five core pillars that will ensure our life-saving products, NEXLETOL and NEXLIZET reach the appropriate patients. One, our expanded label, our anticipated new label will reflect CLEAR Outcomes data and will also create a differentiated and expanded indication that includes high-risk primary prevention patients. Two, all new promotion. Current promotional resources for NEXLETOL and NEXLIZET are focused on LDL-cholesterol reduction in patients with ASCVD on maximum-tolerated statins and still not at their LDL-cholesterol goal. Based on the anticipated new label, the team has prepared a powerful suite of promotional tools that will communicate the CLEAR Outcomes data across the expected new and expanded patient population.
Extensive market research has been conducted to ensure the right sequence of data will be communicated at the right time. Three, deeper reach. I'm proud to announce that we've completed our sales force expansion and have recently deployed 60 new territory managers into the field, bringing our team up to 150 representatives. These motivated individuals together with improved digital resources will allow us to expand our depth and breadth to reach a target universe of 45,000 health care providers comprised of both primary care providers and specialists. Four, patient activation. We've created a bold new consumer campaign to drive awareness and ensure appropriate patients have discussions with our health care providers about NEXLETOL and NEXLIZET.
And five, payer access and reimbursement. Finally, we continue to align payers' utilization management criteria with our anticipated label to include primary prevention and primary hyperlipidemia while at the same time enhancing our patient service programs to support both patients and health care providers alike. We're also pleased to announce that ICER, the Institute for Clinical and Economic Review, just determined NEXLIZET as a cost-effective therapy, which adds support for its value proposition to payers. We believe our recent achievements and changes we've implemented set us up for long-term sustained growth. Shown here are a series of important commercial, clinical, regulatory and financial milestones that we expect to be achieved along the way.
You'll see that this steady stream of catalysts begin to form a road map for long-term value growth. We've already expanded our salesforce and anticipate label expansions in both the U.S. and Europe. With expected new global labels, we anticipate guidelines to be updated. In addition, we expect to file INDs or investigational new drug applications for our next-generation ACLY inhibitors to lay the groundwork for growing our product pipeline beyond bempedoic acid. Furthermore, our partners will continue launching our products in even more new territories under regular cadence, creating additional revenue streams and bolstering our growing global franchise. Longer term, the optimization of our balance sheet and partnership-related cost savings should enable us to continue to enhance our capital position over time.
We also see meaningful revenue contribution stemming from the potential for a triple combination therapy in Europe, additional milestone payments from our network of partners, additional ex-U.S. opportunities and continued growth stemming from further advancement of our preclinical pipeline. On that note, I'm excited to announce our intent to hold an R&D Day later this year to review our pipeline of next-gen ACLY inhibitors in more depth. With that, I will now hand it over to Ben Halladay, our Chief Financial Officer, for a more detailed review of our fourth quarter performance.
Benjamin Halladay: Thank you, Sheldon. Earlier this morning, we issued a press release containing our financial results for the fourth quarter, which is available on the Investor page of our website. Please note that unless otherwise specified, my comments reflect results for the fourth quarter ended December 31, 2023. As Sheldon already mentioned, we posted strong fourth quarter results and ended the year with continued momentum, including in new-to-brand prescriptions. We ended the year on a strong note, which really emphasizes the point that outcomes data matters, and we're excited for that data to be incorporated into our new label next month and for what it means for patient access and our ability to actively promote the data for the first time.
We again delivered another quarter of continued growth in retail prescription equivalents, which increased 44% year-over-year and 8% quarter-over-quarter and was accomplished even with our current label and promotional footprint before recently ramping up our in-house sales force. The weekly RPE trend also reflects this momentum and touched the 12,000 RPE mark late in the fourth quarter, a new weekly high. Turning to growth outside the U.S. Our partner, DSE, again, delivered another strong quarter of sales growth in its territories, underscoring the value our approved medicines are bringing to the patients globally. At the end of November, approximately 202,000 patients have now been treated with our therapies in Europe, representing sequential 3-month growth of 28% since August.
I will note that most of this growth has been generated from existing territories. That said, DSE commercially launched in three new territories during the fourth quarter, the Netherlands, Slovakia and Spain and gained approval in Czech Republic as well. In addition, Daiichi Sankyo launched in Hong Kong during the fourth quarter, marking the first country in the Asia region to launch. Turning to our full financial results for the quarter. We reported U.S. net product revenue of $20.8 million, representing an increase of 39% year-over-year. Collaboration revenue, which includes combined royalty and partner revenue was $11.5 million, an increase of 195% year-over-year. Finally, total revenue for the fourth quarter was $32.3 million, an increase of 72% year-over-year.
Turning to expenses. Cost of goods sold for the fourth quarter was $11.5 million, an increase of 174% year-over-year driven primarily by higher tablet shipments to our partners to support new country launches. R&D expense was $17.7 million, a decrease of 46% year-over-year, reflecting substantially lower costs following the closeout of our CLEAR Outcomes trial. SG&A expense was $45.4 million, an increase of 88% year-over-year, reflecting higher legal and promotional costs as well as higher headcount as we began to ramp up our in-house sales force. Of note, we incurred $13.1 million in onetime legal expenses related to our litigation resolution with DSE that are non-recurring in nature. Finally, cash equivalents and investment securities available for sale totaled $82.2 million as of December 31, 2023, compared with $166.9 million on December 31, 2022, although that figure does not include the settlement-related cash payment received in January nor the proceeds from our recent public offering.
Today, we are also reiterating the 2024 expense guidance we put forth last month. For the full year 2024, we expect R&D expense to be between $45 million and $55 million, SG&A expense to be between $180 million and $190 million and total OpEx to be between $225 million and $245 million. I'll note that total operating expenses are expected to come in the same level as last year, we've just [ph] shifted dollars from our R&D budget to the SG&A budget to reflect the closeout of the clear outcomes and ramping up the commercial activities to support our new and expanded label. While we have materially strengthened our balance sheet in recent weeks, we remain disciplined when it comes to expense allocation, ensuring investments we make, including those to support our commercial launch are generating sufficient returns.
And with that, let me now hand it back over to you, Sheldon.
Sheldon Koenig: Thank you, Ben. I'd like to close by reiterating that we continue to deliver on our commitments and execute on our strategic plan to achieve blockbuster status. Sales are continuing to accelerate following publication of our CLEAR Outcomes data last year, and we anticipate a true inflection to occur after we receive approval of our new and expanded labels in the U.S. and Europe later this year. Our strategic plan also consists of an expansion of our product pipeline as we further develop our next-gen ACLY inhibitors. We will further expand on our pipeline later this year. But in short, we are excited about our next-gen platform and the potential therapeutic areas to which it could be applicable. Further development of these assets could help us expand beyond lipids and enter into new markets with significant unmet need, increase our addressable market, extend our product life cycle and open the door to additional partnering opportunities as well as help us achieve long-term sustainable growth.
In summary, I'm excited for what I believe lies in store for us both now and in the future, and our path has never been clear or brighter. And with that, operator, we are now ready for Q&A.
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