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    Esperion Therapeutics Inc (ESPR)

    Business Description

    Esperion Therapeutics, Inc. is a pharmaceutical company focused on developing and commercializing oral, once-daily, non-statin medicines for patients with elevated low-density lipoprotein cholesterol (LDL-C). The company aims to address unmet needs in the treatment of atherosclerotic cardiovascular disease (ASCVD) and heterozygous familial hypercholesterolemia (HeFH) through innovative therapies. Esperion sells medications such as NEXLETOL and NEXLIZET, which are designed to lower LDL-C levels in adults with primary hyperlipidemia.

    1. Collaboration Revenue - Generates income through agreements with international partners, including product sales and royalties.
    2. Product Sales - Sells medications like NEXLETOL and NEXLIZET, which are used to lower LDL-C in adults with primary hyperlipidemia.

    Q3 2024 Summary

    Initial Price$2.23July 1, 2024
    Final Price$1.61October 1, 2024
    Price Change$-0.62
    % Change-27.80%

    What went well

    • Significant expansion in Medicare coverage, from 28% at launch to over 65% currently, increases patient access and drives growth. The company expects further expansion, providing access to a larger patient population and enhancing prescription growth. They now cover 90% of U.S. national lives between commercial and Medicare coverage.
    • Removal of utilization management barriers simplifies prescribing and enhances competitiveness. The company successfully negotiated the removal of prior authorizations and step edits through ezetimibe and statins, making it easier for physicians to prescribe NEXLETOL and NEXLIZET. In some large accounts like SilverScript's Caremark and Aetna, there is no prior authorization required.
    • Strong prescription growth momentum indicates successful commercialization efforts. The company reported double-digit growth on all metrics in Q3, with Q4 starting strong. Improved access and increased physician confidence have contributed to this momentum, and the company is confident that Q4 revenue will be higher than Q3.

    What went wrong

    • Only 65% of Medicare lives are currently covered under preferred status, leaving a significant portion of the Medicare market not yet accessible, which may limit growth potential in this important patient population.
    • Medicare patients face higher out-of-pocket costs with average co-pays around $45, compared to $25 for commercial patients, which may hinder adoption among Medicare patients who represent a significant portion of the target population.
    • Upcoming changes due to the Inflation Reduction Act may impact net pricing and the company's revenue, introducing uncertainty into future financial performance.

    Q&A Summary

    1. Medicare Coverage Expansion
      Q: Has Medicare coverage improved, and will it expand further?
      A: The Medicare coverage for our products has increased from 28% at launch to over 65% now. This improvement is effective immediately due to payers accelerating their processes, rather than waiting until 2025 or 2026. We anticipate additional Medicare contracts, positioning us to cover 90% of U.S. national lives with our coverage. This expanded coverage is making it easier for physicians to prescribe and patients to access our products.

    2. Sales Growth and Q4 Outlook
      Q: What's driving prescription growth, and will Q4 revenue surpass Q3?
      A: We experienced double-digit growth on all metrics in Q3, and Q4 has started off very strong. The growth is driven by improved access, with physicians now finding it easier to prescribe our products due to better coverage and reduced prior authorization requirements. We are very confident that Q4 will be even better than Q3.

    3. Removal of Prescription Barriers
      Q: Are there changes in payer dynamics impacting prescriptions?
      A: Yes, the step edit through ezetimibe has been removed in both commercial and Medicare contracts. In two large accounts, SilverScript's Caremark and Aetna, there is no prior authorization required. This means getting our products has become easier for both physicians and patients, without us having to give any concessions for these changes.

    4. Market Share Gains
      Q: How is product use changing relative to PCSK9 inhibitors?
      A: With increased momentum, we are seeing a shift from treating only ASCVD patients to also including primary prevention patients and those intolerant to statins. Ezetimibe is starting to lose share, and we've observed about a one-point decrease in new-to-brand share for PCSK9 inhibitors since our label change.

    5. Otsuka Collaboration Milestones
      Q: What are the milestone payments from the Otsuka collaboration?
      A: The milestones include the filing and approval of the Japanese New Drug Application (JNDA), a milestone based on inclusion in the U.S. label payable once approved, and a pricing milestone. These payments are expected to occur by the end of 2025 , providing a significant royalty stream from Japan, one of the largest lipid markets in the world.

    6. Net Price Outlook
      Q: Is the net price expected to be stable going forward?
      A: We anticipate continued standard Q4 cyclicality due to the Medicare coverage gap this year. However, with the Inflation Reduction Act (IRA), we expect a smoothing out of the gross-to-net over the course of the year. While there may not be a major change overall, the seasonality from Q1 to Q4 may diminish, resulting in more predictable and streamlined revenue.

    7. Market Dynamics in Japan
      Q: What are the expectations for the Japanese market?
      A: Our partner, Otsuka, has completed a Phase III clinical trial showing statistical significance and is in the process of filing with Japanese healthcare authorities. Japan is one of the largest lipid markets globally, and we are on track with high expectations from Otsuka. This will benefit us with a significant royalty stream.

    8. Patient Copays and Preferred Status
      Q: What's the average copay for Medicare vs. commercial patients?
      A: For Medicare patients, now that we're preferred, the average out-of-pocket cost has reduced to $45, down from $150–$200 previously. For commercial patients using our copay card, the copay is approximately $25. These changes make our products more accessible and affordable to patients.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Product Sales17.03120.320.320.6778.324.828.331.1
    Collaboration Revenue7.2985.513.711.538.0113.045.520.5
    Total Revenue24.32925.833.96932.2116.3137.773.851.6
    Revenue by Geography - in Millions of USDFY 2013Q1 2014 [N/A]Q2 2014 [N/A]Q3 2014 [N/A]Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    - NEXLETOL & NEXLIZET----78.3---
    - Collaboration Revenue----38.0---
    Total Revenue24.325.833.9732.23116.3137.73573.83451.63
    KPIs - Metric (Unit)FY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Average Placebo-Corrected LDL-C Lowering (%)18%18%18%18%-18%18%18%
    Reduction in Major Cardiovascular Events (%)--13%13%-13%13%13%

    Executive Team

    NamePositionStart DateShort Bio
    Sheldon L. KoenigPresident and CEOMay 2021Sheldon L. Koenig has served as the President and Chief Executive Officer of Esperion Therapeutics, Inc. since May 2021. He was also appointed to the company's Board of Directors in the same month. Prior to this role, he served as Esperion's Chief Operating Officer starting in December 2020.
    JoAnne FoodyChief Medical OfficerJune 2021JoAnne Foody, M.D., FACC, FAHA, has served as the Chief Medical Officer of Esperion Therapeutics since June 2021. Prior to joining Esperion, she held roles of increasing responsibility at Johnson & Johnson's Janssen Pharmaceutical Company from November 2016 to June 2021.
    Benjamin HalladayChief Financial OfficerNov 2022Benjamin Halladay has served as the Chief Financial Officer of Esperion Therapeutics, Inc. since November 2022. He joined the company in January 2020, holding various roles including Senior Director of Financial Planning and Analysis (from August 2022 to November 2022).
    Benjamin LookerGeneral CounselJan 2022Benjamin Looker has served as the General Counsel of Esperion Therapeutics, Inc. since January 1, 2022. Prior to joining Esperion, he was the General Counsel of Trillium Therapeutics from April 2021 until its acquisition by Pfizer Inc. in November 2021.
    Eric WarrenChief Commercial OfficerMar 2022Eric Warren has served as the Chief Commercial Officer of Esperion Therapeutics since March 2022. Prior to this role, he was the company's Vice President, US Sales and Marketing from January 2021 to March 2022.

    Questions to Ask Management

    1. Can you provide more details on the gross-to-net headwinds you're experiencing due to the recent Medicare contracts, and how do you anticipate these will impact net pricing and profitability in the coming quarters?
    2. With the expansion to over 165 million patient lives under the new utilization management criteria, have you had to make significant concessions or pricing adjustments to achieve this coverage, and do you expect further concessions to secure additional contracts?
    3. Despite the reported double-digit growth in prescriptions, what challenges do you foresee in maintaining this momentum, especially considering potential headwinds such as the Medicare coverage gap and the upcoming IRA changes?
    4. Given the 20% increase in selling, general and administrative expenses due to higher commercial headcount and promotional costs, how do you plan to manage SG&A expenses moving forward to ensure profitability if revenue growth does not meet expectations?
    5. Could you elaborate on the expected financial contributions and timelines from your international partnerships, particularly with Otsuka in Japan, and how potential delays or challenges in these markets might affect your overall financial outlook?

    Past Guidance

    Earnings Call TitleIssued PeriodGuided PeriodGuidance
    Q3 2024 Earnings CallQ3 2024FY 2024- Total Operating Expenses (OpEx): Expected to be $225 million to $245 million, including $20 million in noncash expenses related to stock compensation.
    Q2 2024 Earnings CallQ2 2024FY 2024- Total Operating Expenses (OpEx): Expected to be $225 million to $245 million, including $20 million in noncash expenses related to stock compensation. <br>- Tech Transfer with DSE: Completion expected by 2025. <br>- New Drug Applications: Planned filings in Canada, Australia, and Israel by the end of 2024. <br>- Otsuka NDA in Japan: Filing expected in H2 2024, with approval and pricing anticipated in 2025.
    Q1 2024 Earnings CallQ1 2024FY 2024- R&D Expense: Expected to be $45 million to $55 million. <br>- SG&A Expense: Expected to be $180 million to $190 million. <br>- Total Operating Expenses (OpEx): Expected to be $225 million to $245 million.
    Q4 2023 Earnings CallQ4 2023FY 2024- R&D Expense: Expected to be $45 million to $55 million. <br>- SG&A Expense: Expected to be $180 million to $190 million. <br>- Total Operating Expenses (OpEx): Expected to be $225 million to $245 million.