Esperion Therapeutics Inc (ESPR) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Esperion Therapeutics and fourth quarter and 2013 conference call. (Operator Instructions). As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mindy Lowe, the Esperion Therapeutics' Communications and Investor Relations. Please go ahead.

Thanks, Kate. Good day, everyone, and welcome to the Esperion Therapeutics fourth-quarter and 2013 year-end earnings call. This is our first quarterly call since our IPO last June, and we look forward to speaking with you each quarter.

I'm Mindy Lowe from Esperion, and with me today are Tim Mayleben, our President and CEO; Marianne Andreach, our Vice President of Strategic Marketing and Product Planning; and Rick Bartram, our Controller.

As a reminder, this conference call is being recorded. To access the playback of this webcast please go to the Investors section of the Esperion website at www.Esperion.com.

Before I review the structure of this afternoon's webcast, I would like 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 the Company's 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 Company's business.

These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and the Company's SEC filings. The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 5, 2014. Esperion undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call.

We issued a press release earlier today detailing the content of today's call. A copy can be found at www.Esperion.com in the Investors section. We'll begin with prepared comments from our team and then we'll open the call for your questions. Now I'd like to turn the call over to Esperion's President and CEO, Tim Mayleben. Tim?

Thank you, Mindy. I'd also like to welcome all of you to Esperion's first quarterly conference call. On today's call I will provide an overall update on the ETC-1002 development program and also insight into upcoming results and milestones. Rick will then review highlights from the fourth-quarter and the full-year 2013 financial results. And then, as Mindy indicated, we'll open the call to your questions.

Let me begin by noting that 2013 was a highly productive and important year for Esperion, with more successes both clinically and financially, than in any other year since we were founded in April 2008. Among our 2013 business highlights we of course completed a $33 million private financing last April and an $80 million initial public offering in June, both leaving us very well-funded to rapidly advance ETC-1002 through clinical development.

Also in the second half of 2013 Esperion was added to a number of indices, including the NASDAQ Biotechnology Index, the Russell Global, Russell 3000, Russell 2000, and Microcap Indices, as well as the MSCI Microcap Indices.

Our clinical and scientific colleagues were especially productive in 2013 and want to highlight some of the things that they accomplished: publishing and presenting multiple Phase IIa clinical study results that, in the aggregate, included dated from 242 patients that were treated with ETC-1002.

Results demonstrated, for example, consistent and significant reductions in LDL-cholesterol, as high as 43%, and statin-like reductions in levels of hsCRP, a key marker of inflammation associated with cardiovascular disease.

We also published a study in the Journal of Lipid Research that demonstrated for the first time the effectiveness of 1002 in reducing chronic inflammation in preclinical models of inflammation. We published full results from the 003 study in patients with hypercholesterolemia. This was in the Journal of the American College of Cardiology.

We published full safety and efficacy results of the 005 clinical study for the treatment of patients with hypercholesterolemia and type II diabetes. This was in the Journal of ATVB.

And as some of you know, Dr. Ronald Goldberg of the University of Miami Miller School of Medicine, published an editorial in that same issue of ATVB, and this is the March issue. This is in response to the publication of the 005 study noting that 1002 was a novel approach to the management of patients with hypercholesterolemia and type II diabetes. Due to the effects of 1002 not only on LDL-cholesterol levels, but also subclinical inflammation without worsening glycemic control, and that's something that you've heard us emphasize before.

We presented full results from the 006 study in patients with hypercholesterolemia and a history of statin intolerance. Of course, this was an oral presentation at the 2013 American Heart Association scientific sessions.

And we released positive topline results from the 007 study of 1002, which was an add-on to statin therapy in patients with hypercholesterolemia. And we initiated the first clinical study in our Phase IIb program, what you've heard us refer to as the 008 study. This is in patients with hypercholesterolemia and a history with or without statin intolerance. And statin intolerance is defined as intolerance to two or more statins due to muscle-related adverse events.

The goals of this study are to compare the LDL cholesterol-lowering efficacy of 1002 with ezetimibe. That's the active control and a common therapy for statin intolerance, and of course to characterize the tolerability of 1002 as well.

So, looking to the near future, and specifically 2014, we plan to deliver on a number of important clinical and nonclinical milestones. So, as eventful as 2013 was for us, we're looking at 2014 being more eventful with more meaningful data, so let me just highlight those.

First of all, we're going to complete the 008 Phase IIb study and report topline results in the fourth quarter of this year, the fourth quarter of 2014.

This month, we are initiating the 009 study. This is the Phase IIb clinical study that is our second Phase IIb clinical study, and we expect to report topline results by year end. This study of parallel doses of 1002, both 120 and 180 milligrams per day. It's going to be over 12 weeks like the 008 study. In this case we're adding 1002 onto low and moderate doses of statin therapy in patients with hypercholesterolemia. And it's designed to demonstrate the ability of 1002 to achieve incremental LDL cholesterol lowering in patients with elevated levels of LDL cholesterol, or the bad cholesterol.

Finally, starting next quarter, so starting in the second quarter, and continuing in the fourth quarter of this year, we expect to report results from some of our more high-profile nonclinical studies. So let me repeat that again: I just spoke earlier about our clinical studies that are going to be reporting out. We are also going to be reporting results from some of the more high-profile, nonclinical studies. So that's going to include a long-term, 12-month monkey toxicology study, and of course by the end of the year our two-year carcinogenicity studies.

So, again, in summary, 2014 is going to be a pivotal year for ETC-1002 with both clinical and nonclinical results starting to report out next quarter and through the end of the year.

So with that, I'll turn the call over to Rick for a brief review of the financial highlights from the fourth quarter and 2013. Rick?

Thanks, Tim. Our net loss for the year ended December 31, 2013, was $26.1 million compared to $11.7 million in the prior year. This is primarily related to increases in R&D costs for the advancement of ETC-1002 and the completion of the 006 and 007 studies, the initiation of the 008 study in October, as well as increases in public company operating costs.

As of December 31, 2013, Esperion had approximately $78 million in cash and investment securities and no debt. We expect that our current cash, cash equivalents, and investment securities will be sufficient to fund our operations through the end of 2015. We currently have 15.4 million shares of common stock outstanding, with another 1.7 million to be issued upon the exercise of options and warrants.

With that, I'll turn the call back over to Tim.

Okay. Thanks, Rick. We'll open the call, Kate, to questions now. So, if you would, please poll for any questions that folks may have.

(Operator Instructions). Jonathan Eckard, Citi.

The first one I was going to ask was regarding the chronic tox studies. Could you remind us what the dose margin of safety is -- the dosing margin is in your chronic tox studies over the 120 and 180 doses used in the Phase IIb's?

And then maybe just mechanistically with regard to ETC-1002, if there were going to be histological changes, for example, in a biological system, based on how the drug works, what could you expect? Again, if you were going to see something, what would you guys be expecting to see if it did happen? That would be helpful. And then I have another question regarding the Goldberg editorial.

Okay. So let me just -- this is Tim, Jon. Thanks for your questions. Let me just take a stab at the first couple of questions.

So just to remind you -- not just you, but to remind everybody -- the high dose that we have in our toxicology studies is 60 milligrams per kilogram per day, which just rough numbers, calculates out to about 4.5 grams per day for human dosing. So at 120, that's quite a bit. I'm trying to do the math in my head, but I think it's 20 to 30 times. And at the 180, it's closer to the 20 than the 30, but some very nice margins there.

In terms of what we would expect to see if we were to see anything in our long-term toxicology studies, I think the thing that we always come back to is there's a long history -- 40, 50 -- well, 50 years of history in this therapeutic area with LDL lowering drugs. And what you typically see -- what's been seen in the literature -- in fact, we were just reviewing some of these articles recently -- what you typically see in some of these studies is -- in most of the studies -- is, because liver is the target organ, you see increases in liver weights. And then you see some either hypertrophy or hyperplasia in some of the liver cells.

But, again, there's variability among different lipid-regulating drugs. But I think that's probably the headline that, most likely, those are the things that you see because, again, the liver is the target organ.

Okay. Just to be clear, the chronic tox studies for most of the liver or the statin lowering LDLs and lowering drugs in the past have had similar type things (multiple speakers)?

Right. Yes, no, so that is a great point, Jon. I think we are always talking in the context of drugs that regulate LDL, that lower LDL. And so, when we are talking about ETC-1002, we are always trying to put it in the context of other successful lipid-regulating drugs. And other successful lipid-regulating drugs have shown these kinds of characteristics.

And, again, we have the great benefit of Roger, who has worked in this therapeutic area for 30 plus years and a team of consultants and advisors that have similar experience with not only Lipitor but other lipid-regulating drugs. And so we are more than capable of putting these results and the things that we're seeing in context. And, again, if we're seeing things that surprise us, we're obviously going to let folks know.

All right. I was just asking so that, whatever the results may be -- hopefully clear, but just the interpretation of them can be clear once they're out. So that's the first thing. That's very helpful, thanks.

And then the other one was regarding the Goldberg editorial, which was very interesting. It highlighted several interesting things about the drug's mechanism. One thing that Dr. Goldberg -- and recognizing he's not a PI on any of the trials -- he mentioned something about -- something to the degree of the drug hitting the same pathway as statins, so the utility in combination with statins may be unclear. I forget the exact wording, but maybe you can talk a little bit about that and why that may or may not be the case (inaudible).

Yes, I'm going to let Marianne take that one, Jon.

Hi, Jon. When we were reviewing the editorial the first time, we thought some of the things that Dr. Goldberg referred to relative to the mechanism of action, we paid a lot of attention to. He wrote this editorial based upon his review of the available literature for him and information. And some of the things that I think that were included in the editorial relative to mechanism may not be precisely correct. So, when you look at something that's written like this, this is someone entirely independent of the Company.

And as you pointed out quite correctly, he's not a PI, he's not a consultant to Esperion, he's not someone we've even reached out to as a key opinion leader. So he's taking this from the information he sees and how he interprets it. So obviously this provides an opportunity to perhaps begin a dialogue with him about what's going on with the mechanism of the product so that he can better understand how ETC-1002 works, especially the potential as an add-on to statin therapy.

Thank you very much. I wasn't trying to take away from the editorial, but there was just a couple comments along those lines that caught my eye, and I just wondering what your stance is, so thank you very much for that. I'll get back in queue.

Jason Butler, JMP Securities.

Thanks for taking the question. I guess just to follow up on the editorial comment on mechanism, one thing that maybe could be taken as a positive were his comments on the similarities between the mechanism and the MK activity of metformin. And from a safety perspective, that could be seen to give comfort. Do you have any views on his comments there?

Well, as you can see from -- if you know anything about Dr. Goldberg, he is highly experienced, not just in the lipid area but also in the diabetes area, and has always been a proponent of metformin. Understanding that context and comparing 1002 to metformin within the editorial, we see as positive.

And, Jason, I think too that you've heard Roger say many times that the AMP kinase is a very interesting target for cancer metabolism now as well. And so we have taken comfort not only from the developments in that space, but obviously also folks like Dr. Goldberg that are very experienced with a known AMP kinase activator, metformin.

Great. And now you're essentially weeks away from starting the statin add-on Phase IIb. Can you just walk us through again how the changes in treatment guidelines have impacted your thinking around study protocol there, if at all?

Jason, you are -- I'm smiling as you were asking that question, because I think if we go back to November when the guidelines first came out, there was I think -- I would characterize it as tremendous confusion about what the guidelines would mean. There was a lot of controversy about those guidelines. And that seems to have dissipated over the last four or five months since those were initially published.

And we have heard repeatedly, not only from other sponsors or developers of drugs in this space, but also from a number of KOLs and other physicians that we talk to pretty regularly, and the jury is still out on when and how those new guidelines are going to be implemented. And so, as it relates to the add-on to statin opportunity, I think our bent is probably similar to the actions or lack of actions of the [PCF K9] sponsors, which is there still are a lot of people who are taking statins that are not able to get to their goal using a [pre-ACCA] guideline phrase that we used to use, and that is a medical need.

And regardless of the new guidelines that came out, they are guidelines; they're not rules. And how physicians and whether physicians ultimately end up adopting them, or whether the next version of these guidelines change again to go back to goals, I think we don't know but we think that the medical need is still there regardless of what the guidelines have promulgated.

And I think perhaps the biggest thing, and I'll stop my comments and have you ask further questions if you'd like on this, but I think our perspective is we're really trying to operate at a pragmatic drug development level here. And like I said, the need is still there and that's the need that we're pursuing with this study.

Great, thank you. Appreciate the comments, Tim. Thanks for taking the questions.

(Operator Instructions). Brian Klein, Stifel.

First off, on the nonclinical data, how rapidly do you think you can get that to the FDA? And when should we expect a removal of the partial clinical hold to occur?

Yes, no, those are very, very appropriate questions. So, we've been saying that we will get the long-term or the chronic tox study reports in the second quarter. We will turn those around pretty quickly, so review them and finalize them, and then get them filed with the FDA in the same quarter. So we expect those to be filed with FDA next quarter.

I think from a practical standpoint, though, in terms of when the FDA may choose to take a decision to remove the clinical hold, I think that's not something we have control over, so I don't want to set anybody's expectations that it could happen this year.

I think our conservative position is that it's most likely to happen in 2015 with the timing of the end of Phase II meeting. If it happens before then, great, but we know they have to address it and talk through it at the end of Phase II meeting.

Great. Thank you, that's helpful.

Yes.

And then just quickly on the Goldberg editorial as well, just wondering if you have ever tested ETC-1002 with metformin or any of the other currently used diabetic agents, and if you can give us some color there?

Well, that is a very prescient question, actually, because we have had that discussion internally. We are in the midst of putting together the protocol design for exactly that study.

So I think, just remind everybody, we had done the drug-drug interaction studies with statin, with atorva statin last year, had continued that work in the early part of this year with other statins. And literally our next step from a drug-drug interaction standpoint is to evaluate ETC-1002 with metformin.

So it will be -- again, it will be the classic sort of DDI Phase I study, but it is, to your point, it is a question that we want to answer simply because the 005 study results with ETC-1002 as monotherapy were so positive.

And just to remind everybody, that was the study in hypercholesterolemic diabetics that showed an LDL reduction of 43% after four weeks of treatment. And so very interesting and compelling results that certainly, as we've talked about before, encourages us to do further development in that patient population, that diabetic hypercholesterolemic patient population. But we think an important next step, Brian, is definitely to do that metformin DDI study with 1002.

Terrific. Thank you for taking my questions.

You bet. Thanks, that was a good one.

Jonathan Eckard, Citi.

Thanks for taking my follow-up. So, just maybe about the two Phase IIb trials. So, the first trial in statin intolerance, Tim, you said that the patients had to be intolerant to at least two statins. Was one of the criteria that one of those statins was at the lowest dose? Or was that not a criteria for that trial?

No, you're exactly right. You're exactly right, Jon, so sorry for not making that more clear. It is intolerance to two or more statins, one at the lowest approved dose. And that is, I know we've talked one-on-one, but for everybody else's benefit, this is a definition that we have received directly from FDA, so direct communication from FDA with that promulgated definition for statin intolerance.

Great. And then the protocols for the (inaudible) statin trial appears like it's already on clinicaltrials.gov? (multiple speakers)

So, let me just clarify for everybody. Our definition of initiating a trial when we will send out a press release indicating that the trial has started is when we have randomized our first patient. But there is -- again, for -- I apologize if you know this and everybody else knows it as well, but just to clarify. We have an investigators' meeting. We qualify all the sites, obviously, prior to that, and then sites are initiated and can start screening patients. So all of those things have happened, and so we will be randomizing patients this month.

And, if you recall -- like I say, we're just very conservative about our definition of initiating a trial. It's not when we hold the investigator meeting, it's not when we get the protocol approved, it's not even when sites start screening. It's actually when the first patient is randomized.

We feel like that's the most conservative description of study initiation. So, you're right, it is already on clinicaltrials.gov because we had the investigator meeting and we are screening patients.

I wasn't trying to call you out (laughter). What you're doing is fairly normal, a lot of other companies do it.

But I was going to ask one thing was, one, the inclusion criteria is -- and, again, this is the add-on trial -- is for LDL C greater or equal to 130 milligrams per deciliter or less than 220 milligrams per deciliter. So maybe in the context of -- again, maybe there isn't a context with the new AHA guidelines -- but with that range of LDLs on a statin, can you maybe talk about, like strategically, how that is important versus, say, a cut off of 100 or greater lower or 80 or greater, so on and so forth. Maybe if you could just claim why you picked that range and how it could be strategic going forward.

Yes. No, it's a very good question and one that we probably wouldn't have gotten to if we didn't have the level of experience of drug developers in this space around the table.

But you're right, I think one of the keys that we think to drug development in this space is to make sure that the baseline LDL levels for patients coming into our clinical trials are actually relevant. That is, patients that have real disease, if you will, which real disease indicating that they have relatively uncontrolled LDL levels.

That's important for a number of reasons. One, it turns out if you look at some of the failed studies in this space, and baseline LDL levels are relevant to some of the failures or some of the criticisms of trials that have failed. And so we think it's really important to make sure that we're not enrolling just any patient, but we're enrolling patients with, as we say, real disease; that is uncontrolled LDL cholesterol levels. So that, one, ETC-1002 can show LDL lowering of significance, both from a percentage standpoint, but also from milligrams per deciliter standpoint. Because if you look at the literature again, the accumulation of data over the last three plus decades is that the higher the baseline LDL levels that you start out at, the more significant cardiovascular disease benefit you can provide, because you can get a higher magnitude of LDL lowering, absolute lowering, as well as percentage lowering.

That's very helpful. Thank you very much.

Jason Kantor, Credit Suisse.

Good afternoon. This is Jeremiah filling in for Jason.

Yes, hey, Jeremiah.

Thanks for taking my questions. In terms of the preclinical studies that you've mentioned, what level of detail should we expect from those studies? And would you press release those results and then present it later on? Or just try to hold out for a specific meeting later on?

No, that's a very good question, Jeremiah, because this is a little bit unusual. I think we may have talked about this off-line that it's not typical for companies, any company in the biotechnology industry, to typically be talking about nonclinical results. And, for example, to your last question about presenting these data, nonclinical data typically don't -- in fact, I don't think we can think of a situation where nonclinical data had been presented at a scientific meeting, perhaps at a -- or even at a clinical meeting.

So, I think the right way for us to think about -- and for you all, to be thinking about this data is, it's probably more from the standpoint of not releasing a whole bunch of data that folks won't understand or be able to put in context. But recognizing that we'll be providing more negative reassurance, if you will, about the results, that if there's anything of significance in those results then we're going to be out talking about them. But absent that, we wouldn't expect to provide gross detail, if you will, in terms of all the study results because as you may know, these reports end up as hundreds of pages, and of course there's lots of animals in the study. And I think it's important for us to both summarize and put those results in context, which is exactly what we intend to do. Does that make sense?

Yes. No, that's very helpful. And one last question in term of expenses, the R&D spending level that we saw in Q4, is that indicative of a quarterly run rate we could see in 2014? And would that be roughly level, or could that increase throughout the year?

Yes, Rick, can you take that question?

Sure. Thanks, Jeremiah. We can expect that an R&D run rate for the upcoming year, for 2014, will be about 75% of operating expenses. So a little bit more of an uptick than what we're currently seeing.

Thank you for taking the questions.

We will now conclude the Q&A portion of the call. I would like to turn the call back over to Tim Mayleben for closing remarks.

Thank you, Kate.

Hey, I want to thank everybody for joining the call today and for your continued interest in not only 1002 but also our Company, Esperion.

As I mentioned in our prepared comments, 2014 promises to be data-rich year, very eventful, and we look forward to updating you on our progress as we move through the year. So, thanks so much and wish you a good day.

This concludes today's conference call for Esperion Therapeutics. You may now disconnect.