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. Be advised that today's conference call may be recorded. I would now like to hand the conference over to Tiffany Aldrich, Senior Manager, Corporate Communications at Esperion. Please go ahead, Tiffany.

Thank you, Carmen. Good morning and welcome to Esperion's Second Quarter 2022 Financial Results and Company Update Conference Call. I am 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, August 2, 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 content 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 e-mail corporateteam@esperion.com to schedule 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 Strategy Officer; and Ben Halladay from our Finance Department. I will now turn the call over to Sheldon for some prepared remarks. Sheldon?

Thank you, Tiffany, and good morning, everyone. It's incredibly exciting to speak to you today about our significant progress in the second quarter of this transformational year for Esperion and highlight our remaining areas of focus for 2022. We are pleased to announce that while continuing to drive consistent growth, we have achieved 100% MACE-4 accumulation in our unprecedented CLEAR Outcomes trial and are rapidly approaching the most significant inflection point for the organization to date. We remain on schedule to report top line results for CLEAR Outcomes in early first quarter 2023. We continue to execute quality, site closeout visits, scrub the database and ensure accurate and complete data collection and database lock from this large global trial encompassing 1,200 study sites and over 14,000 patients. We plan on releasing a brief top line statement of primary endpoint results early in the first quarter with comprehensive study results to be presented at a major medical conference in the latter part of the quarter. The upcoming CLEAR Outcomes readout represents a significant catalyst for our business and for patients as the positive Outcomes study and the ensuing label has the potential to make bempedoic acid the only oral LDL lowering therapy since statins to be indicated for CV risk reduction. The entire organization is working in unison to ensure flawless reporting and launch of these data and to deliver on our commitment to driving exponential growth for both NEXLETOL and NEXLIZET. A large 300 healthcare provider payer market research project conducted in Q2 validated that positive data would unlock exponential growth through improved market access and expanded market share. At the same time, we have assembled a diverse and prominent group of scientific experts for our Scientific Advisory Board and are preparing to share with you our longer term plans…

Thank you. [Operator Instructions]. Our first question comes from Michael Yee with Jefferies. Please go ahead. Michael, your line is open. Please check your mute button, Mr. Yee.

We're ready, Mike. We just need to hear you.

Can I continue with the next question? Maybe he's trying to requeue.

Yes, as long as we can come back to Mike, that would be great.

No problem. One moment for our next question. We have a question from Joseph Thome with Cowen. Please go ahead.

Hi, there. Good morning and thank you for taking my question. Maybe just as you're thinking about a potential sales infection, I know you mentioned doing some work in the second quarter, is there a level of CV risk reduction that you think physicians are looking for in order to use the therapy a little bit more in their patients? Or is just kind of seeing extensive benefit in the Outcomes trial going to be sufficient? I'll be looking for anything more giving you any kind of numbers to set guidelines?

Yes. Hi, Joe. First of all, good morning and thank you for the question. So I think it's a little bit of both. I think it is the Outcomes and waiting for Outcomes. And also they are looking for a certain result, something obviously that is positive. I think there's always also two levels. There's an academic level and then there's, if you will, for lack of better words, common prescriber. From an academic perspective, when the study reads out, this study is powered for a 15% residual risk reduction. And I do think that from an academic perspective in discussion, physicians will be talking about that. We'll be speaking to different metrics, to statistical significance, maybe even looking at subgroups, et cetera. Payers and physicians are looking for outcomes. But with that in mind, we also did, as I mentioned in my previous remarks, we just conducted a very large quantitative market research to examine this. And I'll have our Chief Commercial Officer add some color to that.

Sure. Thanks, Sheldon. Thanks for your question, Joseph. Yes, so the level of reduction, we looked at multiple flavors in this 300 HCP and payer quant study. And we found that at that 15% level of reduction, which is the base, which is what the study is powered for, we experienced that significant inflection. We also looked at different flavors of potential outcome. So I'm really encouraged by the results we saw from that study. And again, at the base level of impact, if you will, the 15% that the study is powered for, we see that significant value.

Perfect. And then maybe just one more, if I can. Obviously that's going to be the key inflection driver here. Before then, though, when you're discussing with your physicians and the sales teams are out there, is there anything you can do in the interim? Are the physicians really just saying we need outcomes and obviously the payer structure to change a little bit, or are they able to get the therapy? Is there anything else that you can kind of try and unlock to grow scripts in the more near term and even beyond I guess?

Yes. So Joseph, it's Eric again. So as you know in October of '21, we made the conscious decision to scale back some of our commercial footprint and investment in anticipation of the future CLEAR Outcomes, and the fact that really that's going to create the most bang for our buck. I will say, though, that in our current structure and footprint, we've been able to consistently deliver this growth and 6% volume growth this quarter. Prior authorizations continue to be a bit of a challenge for HCPs. We've implemented a program in kind of the middle of last year to help solve that. We've really amped up our resources associated with that program. We've deployed actually individuals from Labcorp just recently to help HCPs navigate the prior authorization environment a little bit closer. And CLEAR Outcomes really is the catalyst for breaking the prior authorization barrier, if you will. The burden of prior authorizations is real now, but with the CLEAR Outcomes data, we expect a very significant reduction in that difficulty or that barrier associated with PAs.

Perfect, very helpful. Thank you very much.

You're welcome.

Operator, can we try Mike again to see if he's able to ask a question?

[Operator Instructions].

Okay, having some type of technical issue.

Yes. I do not see him, sir.

Okay. Next question.

One moment for our next question, please. Our next question comes from Mr. Jeff Hung with Morgan Stanley. Please go ahead.

Hi. This is Mike Riad on for Jeff Hung. Can you provide us any updates on the engagement process with HCPs? Are you hearing more patients returning to physician offices, or has that stabilized at all?

Eric, do you want to --?

Yes. Good morning, and thanks for your questions. So the environment is returning to “more normal,” still challenging from a cardiovascular perspective and that there is a lot of unmet need but there's also apathy that needs to be addressed in the marketplace. So patients are returning to the office. Our HCPs are able to interact with our sales representatives more and more. But there still is apathy in the market that does need to be addressed.

Perfect. And maybe just a quick follow up, if I could. For the program that you had mentioned, I think it's like the next step programs on increasing adherence. Would you see as the main drivers for this program to actually be able to increase adherence and what are you looking for out of this?

I'll take that question. It's BJ Swartz. As far as the next step navigator program, what we see is physician still, even though we have a 90% commercial coverage and significant Medicare coverage, the prior authorization burden has been such it's not allowing patients to get the products in the shortest period of time. So the biggest driver is really assisting with the prior authorizations to ensure patients do get their product when the physician puts his hand to the pad in the shortest period of time. We had just, as Eric mentioned, partnered with Labcorp for a program to have field reimbursement support in the field. And that group will work hand in glove with the offices and payers to stay on those prescriptions until the patient gets the prescription in hand. And so we are super excited about that program that just kicked off July 1.

Awesome. Thank you so much and congrats again on reaching 100% accumulation.

Thank you.

Thank you. One moment for our next question, please. All right, we have the line of Mr. Michael Yee with Jefferies open. Please go ahead.

Hi, guys. Good morning. Can you hear me?

Yes, great. Hi, Mike.

Hi, Mike.

Sorry about that. I like going back to the Zooms. Two questions, one on commercial and then one on thinking about the Outcomes study. On the commercial, I know it grew 5.9%. Just wondering if there were any changes to gross to net or inventory in the quarter? The reported number was actually a little bit lower than the net amounts, so just trying to figure out quarter-to-quarter what was going on there. Are there any changes? And then on thinking about when the Outcomes study reads out in early first quarter, I know you have historically said that it will take some time to get the label and traction to valid market, all of that. So that will take some time. And I know that there are different avenues of capital to seek. Can you just remind us, I think one is the warrant coverage that's out there, remind me, that's one, but just talk to us about how you would foresee the different scenarios for capital to push the Outcomes? Thanks.

Sure, will do. So first of all, I'm glad we could get your line unmuted there, Mike, and again apologize for any technical difficulties. Regarding your question as it relates to gross to net, we had two things that occurred in the quarter. One was we actually initiated a contract of Medicare coverage. It was a win at Cigna. And we started to see the volume come through with that contract. We also had Medicare coverage gap that we also had to pay during the quarter. Of the Cigna win, we view as a win for us, not only for the quarter, but in the future. Today, when we announced the fact that we have the 100% MACE-4 accumulation, that's one big step forward again to what we've been consistently describing as the CLEAR Outcomes study being an inflection point for us. So we're one step closer to that. I bring that up, because that's going to allow for us to have more volume of prescribing once the CLEAR study actually reads out. And that's what's really going to help stabilize our GTN. And I would move forward to say that volume increases also will significantly reduce our distribution fees as well. So we're well poised as it relates to moving forward, having the CLEAR Outcomes study and again that will be our inflection point for volume and allow us to stabilize our gross to net. But these events that occurred merit Medicare coverage gap and also the win at Cigna is really like any other pharmaceutical business, and this is the cost of doing business. And we were happy to see that consistent growth and volume as you mentioned of 5.9%. And we've been consistent in saying that, that we would demonstrate continuous growth through the year. As it relates to capital strategy and the warrant coverage, et cetera, so we did do the raise of last December and that did come with warrants at a strike price of $9. If you look at the total value of those warrants, they're roughly $305 million. They have a two-year expiry on them. And our capital strategy, although we're not giving explicit details, once we have the CLEAR Outcomes study in hand, we believe that we have a lot of different pathways that we can go as it relates to getting the capital that we need in order to move forward. As I mentioned in our prepared remarks, we're well capitalized to the end of the CLEAR Outcomes study and some runway post the study. But we will be looking at what levers do we want to use as it relates to bringing in capital once we have our positive CLEAR Outcomes study.

Okay. Thanks, guys.

Thank you. One moment for our next question, please. Our next question comes from Jessica Fye with JPMorgan. Please go ahead.

Hi, guys. Good morning. Thanks for taking my questions. First one is following up on the comments about your market research, what does your market research suggest about the potential change in utilization of NEXLETOL and NEXLIZET once the Outcomes data are available? Second, can you walk us through how you think about the magnitude of event reduction in CLEAR Outcomes based on the LDL baseline that patients enrolled and the expected LDL reduction you can achieve in this population? And third, following upon Mike's question, do you expect meaningful changes in net price once your Outcomes data is available beyond just maybe economies of scale on distribution? On the one hand, it seems like it's sort of hard to move that net price higher even irrespective of new data. But any indication from the payers there, or is it less about improving that price and more about volume? Thanks.

Absolutely. Eric, do you want to start?

Great. Yes. Good morning, Jess. So with regards to the market research study, we saw -- and I'll just categorize them as exponential increases and penetration from the HCPs that we interviewed and that ultimately participated in the quant. And per the other question that came in earlier, these exponential increases in penetration came at that base level of benefit or that 15% which the study is powered for. We also saw improvements, significant improvements from a payer perspective in both the breadth of coverage as well as improvements in the utilization management criteria that will make it much easier for HCPs to prescribe the product.

Jess, this is JoAnne. Thank you so much for your question. I think we are absolutely thrilled that we've hit 100% MACE-4 accumulation for the CVOT and are really looking forward to our top line results Q1 of 2023. To your question regarding I'll say reasons to believe and confidence in the study, the study, as you know, is powered for a 15% reduction in cardiovascular events based on all that we know about bempedoic acid. I think though as we think about this, understand that the population is very unique. It has the highest LDL cholesterol of any recent non-statin trial, that being 139 milligrams per deciliter. And not only is the LDL high, but it's a very unique population with 80% of patients not able to take a statin. We know that in patients like these as well as given the high rates of diabetes, pre-diabetes and obesity in the cardiovascular outcomes trial that these patients tend to be hyper responders to our drugs. If we look further at smart analysis conducted by [indiscernible] and now published, we see a potential cardiovascular risk reduction closer to 20%. So we are highly confident in this study, again, emphasizing that it's powered at 15%, as Eric previously mentioned, that is enough to move the needle in the clinical community. And we look forward to having hopefully positive results and having bempedoic acid be the first non-statin oral therapy with cardiovascular risk reduction outcomes and a potential label as we move forward.

Great. Thanks, JoAnne. And then, Jess, for your question regarding net price and how we can demonstrate meaningful improvement beyond just economies of scale, I'll have BJ answer that. She's actively working on that. BJ?

Thank you, Jess. As Jo mentioned, the wholesaler DSA fees, as that volume is unlocked, those fees will be reduced. But also as the volumes increase with our payer contracts that are in place and we hit a breakeven from a profitability standpoint, and then hit the trajectory of growth. That's another significant factor in reducing the GTN. We recently just had a Payer Advisory Board in person and actually conducted a mock P&T. And at that mock P&T, the payers all agreed that significant volume will be unlocked with the readout of CLEAR. And so we're very excited about that. Again, in the interim, as mentioned, we partner with Labcorp for the field reimbursement support team that will work hand in glove now. And also payers are starting to look at their UM criteria even prior to the CLEAR Outcomes readout based on the demand that we start to see of patients with payers.

I would just add, we've also just have recently seen in the past week or so, we've talked about this before, but we have Aspen which is somewhat of a mini hub for us, that actually helps physicians facilitate prior authorization fulfillment, as physician's offices and for patients so they can get the drug. And we've seen the highest increase ever in this program. We had actually over 300 patients in one week alone. So this is, again, something very promising and we're starting to really see this as we move forward and also awareness grows.

Thank you.

Thank you. One moment for our next question, please. Our next question comes from Judah Frommer with Credit Suisse. Please proceed.

Thanks for taking the question, guys. Good morning. Could you just remind us of the timing around potential guideline changes and then potential label change? And then you did call out in the release that the UT Southwestern real-world data that you collected, it does seem like there's going to be another left in terms of ensuring to new guidelines. How do you plan on tackling that?

JoAnne?

So, Judah, thank you so much. So as we mentioned, right, we will anticipate our data from the CVOT to be available publicly Q1 of 2023. With those data, we anticipate then potential for guidelines to be updated, whether it be from the American College of Cardiology, the American Heart Association, or the European Society of Cardiology within 2023. Then we would anticipate label being filed and submitted as quickly as possible thereafter, with an anticipated label in first half of 2024. Understand, though, that many of the patients within the cardiovascular outcome trial are on label for us currently in the U.S., and we imagine that that will cause an increased utilization of the product then bolstered by guidelines, which then will also improve or reduce prior authorizations potentially as we move forward. So we see this as really a critical inflection for the organization, for providers and for patients as we get the therapy out to them.

Okay. I guess another way of asking my question, is updating the guideline enough to reduce prior authorization burden? And do you think that's enough to increase utilization, or do have your sales force go out and alert providers to guidelines as well?

So, Judah, first, I think that having the study in public domain is enough, irrespective of the guidelines to change payer conversations. And BJ can speak more to that and to our strategy to engage payers prior to the guidelines.

Yes. So certainly the readout is going to be helpful. But with the guidelines, payers always look to other resources. In the meantime, they also look to validate it with large societies and all of the associations. So again, I think from our recent Payer Advisory Board that we just had a mock P&T, that was one area that the advisors told us as well as soon as they saw the guidelines that that would be tremendous in validating the utilization and validating changing their prior authorizations in UM criteria.

Great. Thank you.

One moment for our next question, please. Our next question comes from Serge Belanger with Needham & Company. Your line is open.

Hi, Serge.

Hi. Good morning. Just a couple of questions on the ongoing European launch. It looks like the product will be available in all the major markets by the time the Outcomes study reads out. Just curious if you expect the same kind of inflection in improved access and expanding market share with a positive Outcomes study in Europe as you do in the U.S.?

Sure. So, you are correct that most of the major markets either have launched or will be launched. Again, in Europe, Daiichi Sankyo has been very successful. As a matter of fact, in the U.S. we actually look at their launch as almost a marker for us when we have our Outcomes study. And the reason why I say that is because when you do a comparison of the EU label to the U.S. label, one of the biggest headwinds for us in the U.S. is the fact that patients have to be on the maximum tolerated dose of a statin and they also have to be identified as having ASCVD, which is in Europe they do not have that hurdle. Upon the CLEAR label here in the U.S., those elements, maximum tolerated dose of a statin, having to actually identify patients as ASCVD, those will go away. And those will reduce the hurdles of patients as it relates to getting the drug here in the United States. Now in Europe, just getting back to your question, we actually think that, again, based upon the success that they already have, having the Outcomes study and having residual risk reduction and looking at other cardiovascular products that have launched that have outcomes in Europe, you always see an inflection post outcomes as it relates to more uptake, especially if you can show reduction of risk. And as JoAnne mentioned in a previous question, this is a very unique study, as you know, Serge. It's not only the fact that we're looking at LDL level of 139 milligrams per deciliter. But there's also areas that we're looking at from a perspective of hsCRP, glucose and a median follow-up time of close to four years, which is dramatically different than other lipid lowering products that demonstrate outcomes, whether that be in Europe or the U.S. So this will definitely help our partners and Daiichi Sankyo continue to fuel their success.

Does that answer your question, Serge?

It does. Thank you.

Thank you. One moment for our next question. Our next question comes from Jason Butler with JMP Securities. Please proceed.

Hi. Thanks for taking the question. Just when you establish the Scientific Advisory Board, you noted the potential for lifecycle management. Obviously, I understand that you're fully focused on CLEAR Outcomes right now. But can you just talk to the longer opportunities that you might be able to evaluate with lifecycle management of the franchise?

Yes, we can. Sorry, Jason. We were moving our phone here. But yes, first of all, we're really excited about the fact that we have the Scientific Advisory Board and the people that are in our Scientific Advisory Board. We will be having an R&D Day that's going to take place we mentioned in November. We haven't given the specific date yet. But here at Esperion, we do have a very interesting pipeline. We have never really talked about it before. We have a second generation ACL. We also have an oral PCSK9. But I'll have JoAnne maybe just highlight some of the things that we'll be thinking of as we move forward with the SAB.

Yes, thank you so much. We again are thrilled to have a Scientific Advisory Board that has a deep and experience expertise with really internationally renowned researchers, including Dr. Peter Libby as our co-chair of the Scientific Advisory Board. We felt this was critical to set this up to really ensure that we had the best direction for our assets in our pipeline. The first being the platform for our ATP-citrate lyase inhibitor, if you will, the next generation of bempedoic acid and leveraging all their scientific expertise to bring in the best technologies, approaches to ensure the maximum value being brought to that pipeline set of assets. And just to be clear, the next generation has opportunities not only in cardiovascular, but in broad cardio metabolic features, such as NASH, kidney disease, and even broad reaching implications in oncology, and our advisors reflect that with a broad and diverse range. We also have our oral PCSK9 inhibitor, again, moving forward in preclinical phases. So again, stay tuned for Research and Development Day in November where we'll have an opportunity to focus on that. As well as once we have the top line information from CLEAR Outcomes, the opportunity to think more deeply about lifecycle management as we move forward with bempedoic acid.

Great. Thanks for taking the question.

You're welcome.

Thanks, Jason.

Thank you. One moment for our next question. And now our next question is from Paul Choi with Goldman Sachs. Please proceed.

Hi. Good morning and congratulations on achieving the 100% of your MACE-4 events in your study. A few questions from us, please. Have you scheduled any payer discussions just for early '23 post your top line data just for improving access and working on the prior authorization barriers that you referenced earlier? Are these meetings already scheduled, or are you still -- will you have to schedule them after the top line data?

Paul, it's BJ. Thank you for your question. We absolutely are having those meetings scheduling now, but we are in constant engagement with our payers, just improving the UM criteria prior to that as well. So we have our payer value proposition deck ready to go. And we're super excited and as are the payers for the readout. So they will be taking place and part of what the payer team can do coupled with medical is we can actually engage in some of this discussion way before the label change or anything there. And so those discussions we're getting excited for and as are the payers as well as evidenced by Cigna, just adding us to formulary, we've certainly seen that demand and so we're excited for the future.

Okay, great. Thanks for that. And then I know you'll probably detail this a little bit more at your upcoming R&D Day, but with the operating expense I guess around CLEAR Outcomes starting to wind down here in the back half of this year. Can you maybe just speak to how you're thinking about the cadence of potential INDs for those assets that you were describing earlier, JoAnne, like the oral PCSK9 and your next generation ACL compound as a follow up to bempedoic, should we expect INDs to start trickling out in '23, or are you assuming sort of longer timelines there?

So Paul, thank you so much. I think as we think about it, trickle out is the right word. Probably the very earliest we would think would be the end of 2023, depending on the approach. A lot of that is hinged too on where we stand after the Outcomes study with respect to bempedoic acid and potential opportunities there, but as well with the next generation platform in oral PCSK9. More likely the rollout, as we look at prioritizing indications across the platform for ACLi, would be more likely the bulk of those in 2024. Oral PCSK9, again, similarly would anticipate probably 2024 as we think about that.

Okay, great. Thanks for taking our questions.

Thanks, Paul.

Thank you. [Operator Instructions]. And I'm not showing any further questions in the queue, sir.

Great. I just wanted to first of all for those on the line again thank you for your interest and your questions. The organization is extremely excited about what we've announced today of getting one step closer to realizing the CLEAR Outcomes trial with the fact that we've accumulated 100% of the MACE-4 accumulation. So thank you all again and have a great day.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. And you may now disconnect.