Q3 2024 Earnings Summary
- 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.
- 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.
Topic | Previous Mentions | Current Period | Trend |
---|---|---|---|
Medicare Coverage Expansion | In Q1 and Q2 calls, coverage was approaching 50% and early utilization management (UM) updates were noted (e.g., easing prior authorization and UM criteria updates) ; Q4 2023 had no specific discussion. | In Q3, coverage expanded significantly to ≥65% with achievement of preferred status, lower patient copays, and broader access (covering 90% of U.S. lives via commercial contracts). | Accelerated progress with robust patient access improvements and increased physician confidence. |
FDA Label Expansion | Q1 and Q2 discussions highlighted approval of broad new labels (including CV risk reduction, primary prevention, and removal of statin requirements) that expanded the addressable market to around 70 million patients, with Q4 2023 projecting market expansion from 10M to 30M patients. | In Q3, the expanded labels were credited with double-digit prescription growth and further market expansion, solidifying product differentiation and boosting growth prospects. | Consistently positive; labels increasingly drive market growth and reinforce product differentiation. |
Physician Adoption | Across Q1, Q2, and Q4, early-stage adoption was noted with balanced prescribing between primary care and cardiology and initial gains in UM improvements, though adoption was still in the early phase. | In Q3, notable progress was seen with higher physician confidence, easier prescribing due to removal of several UM barriers, and a shift toward broader patient populations including primary prevention. | Strengthened adoption reflecting bullish market acceptance and smoother prescribing processes. |
Prescription Growth Trends | Q1, Q2, and Q4 exhibited robust growth in retail prescription equivalents and new-to-brand prescriptions, with sequential improvements and strong momentum noted (e.g., 43% year-over-year increases in Q1 and 44% in Q4). | Q3 continued this trend with sustained double-digit revenue growth, further increases in retail prescription metrics, and ongoing sales momentum. | Consistent upward trend that reinforces strong market momentum and physician uptake. |
Payer Coverage and Formulary Access Improvements | Q1 and Q2 discussions noted progressive UM criteria updates, with Medicare preferred coverage around 50% and removal of notable barriers; Q4 included improvements like removing ezetimibe step edits and positive payer discussions. | In Q3, further enhancements were described with Medicare coverage now at ≥65%, commercial coverage at 92%, and UM updates now spanning 165 million lives, which facilitates easier access for prescribing physicians. | Progressive improvements that continue to bolster market access and support growing prescription activity. |
Regulatory Impact on Pricing | This topic was not discussed in Q1, Q2, or Q4. | Q3 brought in the Inflation Reduction Act’s impact, with the CFO noting that it will smooth gross-to-net pricing seasonality and lead to more predictable, steady revenue throughout the year. | A newly emerging topic with a positive outlook on revenue predictability and margin stability. |
International Market Opportunities – Japanese Market | Q1 and Q4 did not mention Japan explicitly; however, Q2 briefly noted Japan’s potential as one of the largest lipid‐lowering therapy markets with promising partner collaborations. | In Q3, Japan was highlighted as a significant opportunity with detailed partner plans (Otsuka’s upcoming new drug application, successful Phase III trial) and the prospect of valuable royalty contributions. | An emerging and increasingly significant international growth driver with strong market potential. |
Manufacturing Cost Savings and Gross-to-Net Margin Concerns | Q1 mentioned a 14% decrease in COGS and steady gross-to-net trends; Q2 discussed planned tech transfers with DSE to reduce future COGS and maintain steady gross-to-net margins; Q4 covered early progress on tech transfer and stable margins despite seasonal impacts. | In Q3, progress on the tech transfer with DSE was reiterated—expected to significantly reduce future COGS—and the gross-to-net headwinds were partly addressed by IRA-driven smoothing of seasonal effects. | Continued improvements are anticipated with cautious optimism, setting the stage for favorable future cost efficiencies and margin stabilization. |
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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. -
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. -
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. -
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. -
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. -
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. -
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. -
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.