- Esperion will lay off 40% of its workforce and change its strategy for marketing its cholesterol-lowering pills Nexletol and Nexlizet, which have struggled to sell due to competition and other problems.
- Esperion claims the coronavirus pandemic is at least partly to blame for its disappointing sales. Its two drugs were launched after the spread of COVID-19 limited in-person visits with physicians, an issue it aims to solve with an increased focus on digital and virtual sales tools. Reducing staff, meanwhile, will save the company about $20 million in 2021.
- The layoffs are the latest in a series of strategic moves the company has undertaken in the past year to sustain operations, including naming a new CEO and chief medical officer as well as raising $250 million. The company lost about $134 million in the first six months of the year and had $154 million in cash as of the end of September.
While Esperion's two products can effectively lower cholesterol in heart-disease patients needing more help than older medicines can provide, both have had a tough time gaining traction.
One reason is the availability of potent injectable drugs like Amgen's Repatha and Sanofi and Regeneron's Praluent, each of which are approved for some of the same patients. While these so-called PCSK9 inhibitors were expensive and tough to get when first launched, price cuts have since made them more accessible.
The second factor is that many cardiologists believe that statins, a widely prescribed, generic class of oral drugs, aren't used in enough patients or at sufficient doses — and many may be reluctant to try Nexletol or Nexlizet before exhausting all over options. What's more, Esperion hasn't yet proven whether its pills can reduce the risk of heart-related deaths and complications when used, as directed, as an add-on to statins.
Those issues have added up to a disappointing launch for Esperion, which has seen its stock price fall more than 70% in the past year. Esperion recorded $12 million in sales in 2020 and that number is expected to climb this year, with about $28 million forecast through three quarters. But the company's trajectory was worrisome enough for Stifel analyst Derek Archila to downgrade the stock in May before suspending coverage two months later.
"With multiple debt obligations already, meaningful commercial expense, and roughly 12 months of cash based on our model, we don't think this story gets any better soon," Archila wrote in a May 4 note to clients.
Laying off workers is a cost-cutting measure to extend the company's runway. Esperion employed 479 people in 2020, according to a regulatory filing, so Monday's announcement should affect roughly 190 of them.
But Esperion will likely need a combination of lower expenses and increased sales to sustain operations for another year, when it expects results from a trial of Nexletol in 14,000 statin-intolerant people. That study will measure whether Nexletol prevents cardiovascular death or complications in those people, a key proof point for insurers and physicians.
A significant improvement in outcomes could spur an increase in sales. But modest results could lead to more struggles for Esperion. Amgen and Regeneron, for instance, cut the prices of Repatha and Praluent after their large outcomes studies fell short of expectations.