Good morning and 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 provision 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 1, 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 corporate team at sperion.com to schedule a time to speak with the team. With us today are Sheldon Koenig, President and I; Dr. JoAnne Foody, Chief Medical Officer; Eric Warren, Chief Commercial Officer; BJ Swartz, Chief Strategy 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 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 for goal comprehensive results with Dr. Steve Nissen, the lead investigator of CLEAR Outcomes at the American College of Cardiology's 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 new organization 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…

[Operator Instructions] Our first question comes from the line of Mike Yee from Jefferies.

Congrats on the progress and the updates. Maybe just two from us. You refine the timing or were more specific about the January -- early January release and 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? And the reason I ask is just around help because there are different degrees of positive data to interpret the results. So that's question one. And then the second question is related to the milestones in the cash position assuming you would not raise cash until we had the presentation. Were there warrants that were issued in the quarter? And tell us about any other opportunities throughout 2023.

Sure. We'll do. So 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. So as it relates to the top line, I think our strategy -- we're still considering exactly, to your point, what type of modifiers we might add. We won't be speaking specifically to a hazard ratio, we won't specifically speak to essentially any type of statistical significance of p-value, et cetera. And the reason for that, just as a reminder, is, of course, we've mentioned specifically we'll be presented 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. So that's the reason for somewhat being -- providing information but not providing all of the details. But as it relates to using words like clinical meaningful, things such as that, we are considering that and once, of course, we have the data, we'll have -- we'll apply those strategies when we actually achieve 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.

Yes. Thanks for the question. So let me start by saying we are very happy with our current cash and funding position. We ended the quarter very strong from a cash standpoint. As far as warrants, we have not had any of those exercise at this time but we are actively keeping an eye out for those. That would be a pretty significant tailwind for us. Just as a reminder, it's $309 million that would come into the company. As far as looking to 2023, outcomes and publication is a major catalyst for this company. And so obviously, that’s going to put us in a very good position to assess what our options are. With the milestones, we’ll know what those are when those are coming in and I think that will just kind of open up what we can possibly do from any fundraising in 2023 and we'll look to do basically what makes the most sense for us then.

Our next question is from the line of Serge Belanger with Needham & Company.

Just one question from us. You’ve previously talked about some pretty significant milestones associated with the CLEAR Outcomes draw. Can you just talk about what triggers these milestones you need to reach a certain hazard ratio or risk reduction? Or is it just inclusion of a label expansion?

Yes. So 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. But in order to actually achieve that milestone as it relates to Daiichi Sankyo is to include the CLEAR Outcomes data in the label of the European label. And that's where we are. Again, it’s based upon the, yes, the study results. The study, again, as a reminder, is powered for 15% residual risk reduction. It’s 90% powered for that. And – but it’s essentially the data from the CLEAR Outcomes study being included into the label. And JoAnne, do you have any further comments as it relates to that?

Sheldon, one just to clarify [ph], that's the European, the EMA label but no other comments and thank you for the question.

Our next question comes from the line of Jessica Fye with JPMorgan.

This is Nason [ph] 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? And what kind of uptake can we anticipate from that?

Before I turn it over to our Chief Commercial Officer, Eric Warren, who’s done a lot of work on 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. But Eric can talk about the other thresholds that we also tested. Eric?

Thank you, Sheldon and thanks for the question. So just to keep it simple, 15% was deemed highly significant from our clinicians and our market research. So 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. But I just want to be very clear that at the base level of outcome, 15%, we have incredibly significant value.

Our next question comes from the line of Tom Shrader with BTIG.

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?

So Tom, thank you so much for the question. And 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. And 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’d be glycemic control or progression to new onset diabetes would be included in the label, obviously, pending results. And we believe that, that’s a significant differentiator for the large proportion of patients with either diabetes or prediabetes. 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, it does focus on patients not able to tolerate statins but also includes 20% of patients not able to maximize their statin. So we will have a significant number of individuals who are on a background statin as well as diabetic based on – or prediabetic based on the numbers. So we think we’ll have important clinical information for prediabetics, diabetics with or without statin and include that information in the label.

Our next question comes from the line of Jeff Hung with Morgan Stanley.

This is Mike Riad on for Jeff Hung. 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 the full data presentation or do you think it would be more gradual and take longer? And 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?

Sure. So Eric, if you could take the first part regarding sales and then JoAnne if you could speak to the pediatric trial.

Great. Thanks, Mike, for your question. So the answer is pretty straightforward, again. So growth will start with the release of the data. So 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. So CLEAR data has come out, we increased the level of growth that we’re capable of delivering. And 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?

So thank you, Jeff, for the -- or Mike, I guess, for the question. And with respect to CLEAR Path 1, this is a pediatric trial focused on individuals or children with familial hypercholesterolemia. And this is really, as we know, a genetically modified disease that runs in family. So our hope is that we can provide another oral option for the 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. But 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.

And Mike, I just wanted to add one more thing as it relates to growth. Since we actually did our plan of savings and transformation last October, one thing we committed to was, of course, not only preserving our burn rate but also demonstrating continuous growth throughout the year, the year defined as 2022. And as Eric has mentioned and as we have mentioned in our prepared remarks, this is with a very small footprint. So 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. And the second part of that is the fact that we've also always stated that CLEAR Outcomes and getting the label will be a significant inflection point for the organization. So thank you again for your question.

And our next question is from the line of Joseph Thome with Cowen.

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 would be helpful. And then 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?

JoAnne, do you want to speak to the COVID?

Absolutely. Joe, thank you for the question. So 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. So 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. And Joe, regarding the second or -- yes, it was your second question, wasn't sure if it was the first or the second, of the top line, if you were to use words such as clinically meaningful, what does that necessarily mean? And I think to us, it's the fact that if it's clinically meaningful, then there's obviously statistical significance. So I think that's one way to think about it.

Okay, perfect. And then maybe just one more quick one because I know the drug does also lowers c-reactive protein. Is there any way based on the literature to sort of uncouple the CV benefits specifically due to c-reactive protein lowering versus LDL reduction? Or how should people best think about that?

So Joe, thank you again for the question. 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 statin reduce c-reactive protein. And so some of their event reduction is because of that. But importantly, we also know that PCSK9 inhibitors and ezetimibe do not have significant effects on CRP. So perhaps this is why PCSK9 has underperformed relative to their LDL reduction. So, 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, 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. And I think you’ll find that helpful.

And our next question comes from the line of Jason Butler with JMP Securities.

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? And then how well powered you are to hit statistical significance on any of the components on a stand-alone basis, most specifically cardiovascular death?

So thank you so much for the question. As you mentioned, we've accumulated for MACE-4 over our 1,620 anticipated events, thereby allowing us to have -- or 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 a 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 prespecified number, giving us much greater power on those harder events.

Okay, great. That's helpful. And then 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 and the full data and ultimately label expansion?

Yes, Jason, it’s Eric. Thanks for the question. So 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. So rest assured, we have a robust plan in the work that will create expansion. But at this point, I’m not going to provide the specifics of that.

Next question comes from the line of Judah Frommer with Credit Suisse.

Just kind of following up on the last and 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 of years ago?

Thanks, Judah. It's Eric. I can start and then JoAnne can layer on to this. So when the product was -- the products were launched initially, there wasn't a lot of specificity. And obviously, the label is somewhat limiting. The label aligns with ASCVD patients 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. So 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. So enhanced clinical messaging, losing the limitations. Also, this translates into payers 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. So hopefully, that’s clear. JoAnne, if you want to provide any additional, that would be great.

Yes. So Judah, I think as we look to this, right, CLEAR Outcomes combined with all the life-cycle management, research that we've done, gives us a label that is really quite simple. It basically would -- we would aspire to a label that would be for individuals at risk, to lower LDL cholesterol to reduce event. And I think, as Eric mentioned, it allows us to be much more expansive, allows us to have this drug where clinicians want to 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. And 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. So 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. And 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 how you get to the full $300 million aside from inclusion in the European label?

Yes. Judah, we've never disclosed how to get to the additional $100 million that's related to specific aspects of the study. That we haven't made public as of yet.

Our last question comes from the line of Paul Choi with Goldman Sachs.

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 primarily driven by lower rates of cardiovascular revascularization versus sort of the hard MACE end-points. And then my second question is with regard to the pediatric heterozygous familial hypercholesterolemia trial, can you maybe just give us some guidepost as to what your regulatory feedback has been like and just sort of what rough time lines might be for completion of that study in that population in order to get the pediatric exclusivity for additional 6 months of patent life?

Eric, before you go. Thanks, Paul, for the question. One of the things I think we really struggled with and it kind of goes to the last question to was overall awareness of these brands. And more and more we're starting to see and even in our prepared remarks, we've talked about the fact of the inclusion of NEXLETOL and NEXLIZET, the bempedoic acid franchise in guidelines and we're seeing more and more opinion leaders, scientific leaders throughout the United States, obviously, throughout the world, also speak about these products and where they fit. And I think that's a good segue of what Eric has been seeing in his market research that he conducted and potential uptake once we have the CLEAR Outcomes. Eric?

Yes. Thanks, Sheldon and thanks, Paul. And yes, so Paul, with regards to the primary endpoint, so MACE-4 is what we’ve evaluated that 15% base level of impact, if you will, is what we’ve anchored research around. We’ve provided kind of incremental profiles, if you will, to assess changes in value. But I’ll just say that, 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 and we also have that significant payer benefit. And we’ve tested that not only in quantitative and qualitative research but we’ve also tested that with a payer advisory committee.

JoAnne, do you want to comment on the pediatric?

Yes, absolutely. So 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 [indiscernible].

Great. Thank you very much.

Thank you. And ladies and gentlemen, with that, we conclude our Q&A and conference call. Thank you for participating and you may now disconnect. Good day.