Ladies and gentlemen, thank you for standing by, and welcome. Please be advised that today's conference call may be recorded. I would now like to hand the conference call over to Ben Church, Investor Relations and Corporate Communications at Esperion. Please go ahead, sir.

Thank you, operator. Good afternoon, and welcome to Esperion's Fourth Quarter and Full Year 2020 Financial Results and Company Update Conference Call. I'm Ben Church, and I'm responsible for Investor Relations and Corporate Communications here at Esperion. With me on today's call are Tim Mayleben, President and Chief Executive Officer; Sheldon Koenig, Chief Operating Officer; and Rick Bartram, Chief Financial Officer. 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 their cautionary statements contained in today's press release and SEC filings. The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, February 23, 2021.

Thank you, Ben, and good afternoon, everyone. We appreciate you joining us today as we update you on Esperion and the significant opportunity that we believe still lies ahead. Since we announced preliminary financial results several weeks ago, we'll keep our prepared remarks brief and get into Q&A. Now, for many, 2020 will be remembered as the year everything changed. While the world changed around us in obvious ways, Esperion changed fundamentally as a company. We received our first marketing approvals for NEXLETOL, bempedoic acid, and NEXLIZET, the first-ever nonfat in fixed-dose combination tablet of bempedoic acid and ezetimibe, moving us from an R&D company to an R&D and commercial organization and global partner. This was an accomplishment more than 10 years in the making and one that most companies never realize; our team did. We also secured additional marketing approvals in Europe, the U.K., and Switzerland under the brand names NILEMDO and NUSTENDI. We worked with our EU commercial partner, Daiichi Sankyo Europe, to launch in Germany in Q4, while earlier announcing a strategic collaboration with Otsuka Pharmaceutical to develop and commercialize our medicines in Japan. All of this, as we and the rest of the world battled against the uneven impacts of COVID-19, while the vast majority of people stayed safely at home. Following their approvals by the FDA, we launched our medicines in the U.S. in the second quarter of 2020. And while we haven't yet achieved the commercial potential for our medicines, we are confident the long-term opportunity remains intact. Throughout 2020, far fewer patients ventured to their healthcare providers in avoidance of the virus, resulting in fewer written statin prescriptions and non-statin prescriptions for lowering bad cholesterol than the year before. This was the first time in history that statin prescriptions declined year-over-year. But despite this, 21,000 patients in the U.S. filled NEXLETOL and NEXLIZET prescriptions in 2020. We continue to hear resoundingly positive feedback about how NEXLETOL and NEXLIZET are working to lower patients' LDL-cholesterol levels in combination with diet and maximally tolerated statins, which is an important metric for our future success.

Thanks, Tim, and good afternoon, everyone. For all of you I haven't had the pleasure to meet yet, I'd like to give a brief highlight of my background and what brought me to Esperion. Over the last few decades, I've worked in various commercial operations and marketing roles across the cardiovascular space. I spent 27 years at Merck, obtaining extensive U.S. and global experience in sales, marketing, and market access within the CV franchise until I first took lead of the global cardiovascular franchise and worked directly on Zetia and Vytorin. From there, I moved to Sanofi to run their global cardiovascular business, including Praluent and managing the relationship with Regeneron. Most recently, I served as Chief Commercial Officer of Portola, overseeing the U.S. organization and building from the ground up the global business recognized today.

Thanks, Sheldon. Today, I'd like to spend my time addressing how COVID has impacted our launch and our U.S. product revenues, which required an optimization of the Esperion cost structure and what steps we have taken in order to create a more sustainable business model for the future. By now, I'm sure you're all aware how COVID interrupted our commercial plans and disrupted a conventional healthcare model associated with normal health management practices. For example, regular physician office visits, lab tests, and prescription refills. Seemingly, overnight, the commercial environment we were depending on for a successful U.S. launch stopped in its tracks. For all of our hard-fought efforts and adaptations on the commercial side of the business, we generated $13 million in U.S. product revenue for the full year 2020 and total revenue of $227.5 million, with significant collaboration revenues of roughly $215 million. On expenses, after building out our commercial function and the necessary processes and systems to support our transformation from a late-stage R&D company into a commercial and R&D organization, we initiated an evaluation to identify and implement several opportunities for cost savings, the first being inventory. As a result of COVID negatively impacting demand and our wholesalers more cautiously managing inventories, we adjusted our budgeted production plans last year, resulting in associated savings. As our original marketing budget was based on assumptions of normal market conditions and pre-COVID revenue ramp, we subsequently focused on rightsizing these activities for internal ROI threshold and prioritizing initiatives with high return on investment. As Sheldon explained earlier, there are a number of initiatives to support the U.S. commercialization of NEXLETOL and NEXLIZET that come with little to no additional cost. The team also had to make difficult decisions throughout the year on our commercial footprint, customer-facing teams, as well as other non-sales functions that supported the launch. Overall, the company workforce was adjusted for the near-term growth potential and the current environment that we're in. This includes the field force, where we conducted standard performance management reviews and also modified the sales geographies to adapt for COVID hotspots and shelter-in-place notices. Our prudent expense management activities culminated in full year 2020 operating expenses of approximately $350 million, falling well below the original February 2020 OpEx guidance range of $400 million to $420 million. Furthermore, last month, we guided total operating expenses for the full year 2021 of $320 million to $340 million, inclusive of $30 million of noncash stock compensation expense. Since the original full year 2020 OpEx guidance only included 9 months of commercial expense, this decline represents an expected annualized cost savings of approximately 25%. To review, R&D expense for 2021 is expected to be between $120 million to $130 million, slightly down from last year, but generally, this reflects the steady-state costs associated with our fully enrolled CVOT study. Our anticipated full year 2021 SG&A expense is in the range of $200 million to $210 million. We ended 2020 with approximately $305 million in cash on hand. In addition, we remain confident we will receive an additional cash upfront payment from a rest of world deal. Furthermore, our existing revenue-based funding agreement with Oberland Capital will provide us an additional $50 million this year. Both will bring additional near-term cash to our balance sheet. Finally, I would like to remind you all that Esperion has over $1 billion in future milestone payments from our existing ex-U.S. collaborations. These will continue to feed our balance sheet in the months and years ahead as our partners continue to execute or should we decide to monetize these. Overall, our cost management initiatives are focused on the preservation of our first-in-class CVOT study and revenue-generating initiatives with high return on investment. We are now a more nimble organization, with an efficient cost structure that allows us to reinvest when the time is right and as the external environment improves. Going forward, we will continue to assess the cash spend against our growth potential and ensure the organization is adequately resourced to advance the business and create greater shareholder value. With that, I will turn it back to Tim for closing remarks.

Thank you, Rick. I would just like to close with this. The COVID-19 pandemic was an unforeseeable obstacle that we all faced throughout 2020 and to this day. However, COVID-19 is a short-term headwind, and the negative impacts of COVID-19 won't be with us forever. Both Esperion and our partners remain very confident in the long-term potential of our medicines. We think the future is bright for Esperion, and we'll continue to fight through the challenges to get our therapies into the hands of patients that need them. We look forward to the coming months as we prepare for a return to normal and the ability to really accelerate the growth of our medicines. So I want to thank you for joining today's call. Operator, please poll for questions.

And our first question coming from the line of Martin Auster with Crédit Suisse.

This is Mark filling in for Marty. My first question is regarding the 4,000 patients in Germany on bempedoic acid that Tim mentioned. Could you provide some perspective on that in relation to the launch pace in the U.S.? Also, were any of these 4,000 patients part of extended access programs? Any additional details would be appreciated.

Yes, Mark, this is Tim. We provided the number, and it is, by all accounts, impressive. It reinforces the decision we made nearly two years ago to partner with Daiichi Sankyo. As you may recall, we mentioned their highly successful cardiovascular commercial team, which has more than 1,000 people across Europe, and they had great success with the launch of LIXIANA a few years back. We anticipated, and they did as well, that they would perform exceptionally well. Our understanding is that they are following a similar strategy to what was used for the LIXIANA launch. These initial patient numbers reflect the strength of their commercial organization. We can confirm that these figures represent genuine commercial patients who are paying and not part of any assistance programs that we know of. Overall, these are solid numbers, but as I mentioned, they are an early indication of the capabilities of Daiichi Sankyo in Europe.

Yes, I agree. It will definitely be worth keeping track of. And then I guess, just my second question is, I'm just curious to get an update on how the rest-of-world partnership discussions have been going? And if there's any update in terms of how we should be thinking about potential timing or size of that potential agreement?

Yes, good question. As we mentioned in our prepared remarks, we expect to complete that this quarter and feel positive about it. Our goal, as stated earlier this year and late last year, is to maximize the value attributed to the rest of the world, and we are on track with that timeline.

Your next question coming from the line of Tom Shrader with BTIG.

This is Julian on for Tom. Congrats on the quarter. Regarding the U.S. launch, I'm wondering if you could comment on script growth among lipid specialists versus GPs? And also maybe any prevailing geographic trends such as regional center versus community uptake? And then, Rick, U.S. revenue for 4Q implies an improving gross to net. So I'm wondering if we should expect this trend to continue? And if so, for approximately how long? And maybe can you remind us what the factors that play are here?

Sheldon, can I ask you to take the first questions and then tip it to Rick to respond to the others?

Thank you for the question. Regarding prescribing trends, we've observed a decline in overall statin use, specifically a 9% drop, although we are beginning to see a gradual increase. In terms of who is prescribing, while there are more primary care physicians than cardiologists, both groups are contributing to the growth in prescriptions. There’s no significant geographic disparity in this trend. Although some states may be slower in COVID vaccination rollouts, we haven't detected considerable differences in patient return rates based on geography. Our insights come from our regular data monitoring rather than extensive research.

Thanks, Sheldon. Rick?

Yes. Sure. Thanks, Julian. So as you know, we've been pretty consistent that we don't disclose our gross to nets really for competitive purposes. As we think about gross to nets, we're pleased with where our gross to nets are currently at. And as Sheldon mentioned in prepared remarks, we're going to have continued plans coming online, particularly in the Part D space. But overall, pleased where we're at. And obviously, as we proceed ahead and have increases in volumes, things will start to level out as all the plants come online.

Our next question coming from the line of Michael Yee with Jefferies.

Two questions on our side. Do you feel like the patient volumes are picking up in the January, February time frame, maybe just talk about what you're seeing in the environment? We hear different things from different types of doctors and different types of medicines. So maybe just make a comment about that. And as that relates to your confidence if COVID is an issue about sequential acceleration, do you feel confident you should see a pickup in sequential growth? I think you did $3.3 million going to $8 million, which is a good number in the fourth quarter. So do you see that kind of ramp as COVID alleviates to talk about those two things? And then I have a follow-up.

Yes. Okay. Great. Sheldon, can I tip those to you?

Yes, will do. And thank you, Michael, for your question. Just as it relates to patients coming back, physicians coming back, we don't really have any quantitative data that we capture that we can speak to that. We essentially get information from the field. And I think what we're seeing is it's a slow trickle back. January was still the deadliest month as it related to COVID. And as you know, we just went over the 500,000 death mark, unfortunately. But if 2020 has taught us anything, it's really to be flexible and monitor the situation. We're not necessarily giving a specific time frame of when we'll return to normal. But I think we have all the initiatives in place that we're currently working on that, once we do return to normal and more patients are vaccinated, we expect that our growth will accelerate. But what we're waiting to see is how quickly this vaccination rollout will occur. And with that, we'll see that more patients will return to the office as well as offices actually opening themselves up for them to see patients.

But I guess, in general, if patient volumes are steady or getting better, your commercial work should accelerate sequentially just because you should have people staying on in each quarter or each month, you should have more people coming on. Should you think that acceleration should be the right way to think about it each quarter?

As we move forward with each quarter and as more patients are vaccinated, more offices and physicians themselves are vaccinated, yes. I mean our hope is that patients will resume going to offices. One thing that we've learned is that patients were not truly getting their physicals. Telehealth doesn't really work in cardiovascular medicine, and we have research that shows that. Therefore, patients weren't even getting their lipid panels. So I think, by default, based upon what we're doing from a marketing perspective and the initiatives that we're putting in place, as patients continue to return to physicians' offices, we would hope that based upon our initiatives we will see acceleration in our growth. It's just a matter of timing in relation to vaccinations and how quickly we all emerge out of this pandemic. I mean we all see that number of cases are declining, etc. So now it's just a matter of vaccinations and people feeling more comfortable going to their physician.

Yes, that's good for '21. And for the last question regarding your starter packs, can you explain how they function? Do customers tend to stay on them for a while? Do they eventually transition to commercial? Any comments to remind me how they operate would be appreciated.

Yes, Sheldon?

Sure. Starter packs are essentially samples that we distribute to all physicians and our target audience. We have provided a significant number of samples, which allows physicians to try the drug with their patients. Typically, the samples are configured for a 7-day supply, enabling the patient to use the drug for a week. After that, the sample box is usually accompanied by a prescription, allowing the patient to have it filled at their local pharmacy.

Our next question coming from the line of Geoff Meacham with Bank of America.

This is Olivia Brayer. Tim, I wanted to ask you on business development going forward, is there an appetite to do deals that maybe are more mid-stage development and capable of driving growth within the next few years? Or at this point, is it mainly focusing on earlier stage programs? And then as a follow-up to that, is external business development becoming more of a priority at this point, whether that's through partnerships or other strategies? I guess I'm trying to get a better sense for whether we should expect a more aggressive approach for pipeline diversification going forward.

Thanks, Olivia. I will have a very brief answer for you, which is, this organization, as you heard Rick say, is 100% focused on two things: one, the commercial success of NEXLETOL and NEXLIZET; and two, the cardiovascular outcome study, the CLEAR outcome study and the success of that study, which, I think, as you heard us say, is progressing extraordinarily well, especially in the broader COVID environment. So nothing more to say at this point on business development. Really, like I said, this organization is entirely focused on those two drivers.

And our next question coming from the line of Chad Messer with Needham & Company.

Congratulations on your solid progress. Looking at your 2021 OpEx guidance, it's impressive how well you're managing costs, particularly given the uncertainty in the current environment. With such a tight range and a favorable comparison to 2020, do you believe you have enough flexibility to pursue opportunities in a more advantageous situation? We all have a baseline, upside, and downside scenario, and it appears you're operating within a narrow window. Can you share your thoughts on whether you'll be able to take more aggressive actions if needed?

Yes. Sheldon, do you want to comment? Thanks, Chad.

Sure. I believe that based on our current position and the initiatives we have implemented, we are well-prepared to achieve our objectives. In my earlier comments, I highlighted some organizational changes we’ve made that will enhance visibility not only for our commercial team but also for our medical affairs, including our medical science liaisons and the scientific platform we are establishing. These changes do not necessarily require significant funds; they primarily require thoughtful planning. By being intentional in our strategy and product positioning, I am confident that we are ready to move forward and accelerate growth in 2021.

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

Sheldon, you did emphasize that part of going forward is going to be educating physicians on sort of the appropriate patient population to use the assets in and kind of where along the treatment paradigm NEXLIZET and NEXLETOL will fit. Is there a specific patient population thus far that you are surprised isn't coming on faster? Or is there a specific message that you think is kind of getting lost? Or is it mostly just COVID clouding interactions? And then second, in terms of real-world compliance, once patients do come on, do they tend to come back and get refills and stay on product?

Yes, Craig. I apologize for that. In relation to messaging and patients, we are currently working on patient segmentation. One of the challenges we faced, especially during COVID when the company launched, was a loss of awareness. This underscores the need to reestablish our scientific platform and clarify the unmet needs while identifying the right patient population and the corresponding messages. We will keep you updated on this in the coming months. Could you please repeat your second question?

Yes, on real-world compliance and refill.

Yes, on refill. So real-world compliance, what we have seen, we've actually looked at refills, and we've benchmarked ourselves to other products that are commonly used. We see the majority of patients are refilling their prescriptions, which is a good sign.

Our next question coming from the line of Derek Archila with Stifel. His line is coming in with technical issues. Our next question coming from the line of Paul Choi with Goldman Sachs.

This is Charlie on behalf of Paul. I have two quick questions. First, are there plans to maintain patient co-pay assistance throughout 2021 as the launch aims to improve over the year? Second, was there any impact from inventory on this quarter's numbers?

Yes. Rick, can I tip that to you?

Yes. So on those, the co-pay program is something that's important to us. We're obviously going to continue to evaluate that, but that is intact for '21 and short answer, no impact on inventory in terms of revenue.

And I'm showing no further questions at this time. This concludes today's conference call. Thank you all for participating. You may all disconnect.

Thank you so much. Thank you.