Esperion(US:ESPR)2025-08-13 20:07markdown [PART I — FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed interim financial statements, including balance sheets, statements of operations, and cash flows, with detailed notes [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets%20at%20June%2030%2C%202025%20and%20December%2031%2C%202024) This table provides a snapshot of the company's assets, liabilities, and stockholders' deficit at specific interim periods | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | Cash and cash equivalents | $86,061 | $144,761 | | Accounts receivable, net | $107,746 | $80,142 | | Inventories, net | $114,466 | $94,491 | | Total current assets | $342,595 | $337,998 | | Total assets | $347,085 | $343,821 | | **Liabilities and Stockholders' Deficit** | | Accounts payable | $74,704 | $51,650 | | Convertible notes, net of issuance costs (current) | $54,766 | $54,575 | | Royalty sale liability (current) | $66,312 | $47,586 | | Deferred revenue from collaborations | $22,313 | $8,518 | | Total current liabilities | $298,796 | $246,233 | | Convertible notes, net of issuance costs (non-current) | $96,998 | $96,745 | | Royalty sale liability (non-current) | $229,600 | $246,024 | | Long-term debt | $146,452 | $140,971 | | Total liabilities | $780,594 | $732,543 | | Total stockholders' deficit | $(433,509) | $(388,722) | [Condensed Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income%20for%20the%20three%20and%20six%20month%20periods%20ended%20June%2030%2C%202025%20and%202024) This table details the company's revenues, operating expenses, and net loss for the three and six months ended June 30, 2025 and 2024 | (in thousands, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues:** | | Product sales, net | **$40,274** | **$28,302** | **$75,187** | **$53,058** | | Collaboration revenue | **$42,111** | **$45,532** | **$72,193** | **$158,511** | | Total Revenues | **$82,385** | **$73,834** | **$147,380** | **$211,569** | | **Operating expenses:** | | Cost of goods sold | **$28,543** | **$15,609** | **$60,081** | **$25,684** | | Research and development | **$7,238** | **$11,461** | **$19,795** | **$24,864** | | Selling, general and administrative | **$39,509** | **$44,185** | **$82,505** | **$86,173** | | Total operating expenses | **$75,290** | **$71,255** | **$162,381** | **$136,721** | | Income (loss) from operations | **$7,095** | **$2,579** | **$(15,001)** | **$74,848** | | Interest expense | **$(20,486)** | **$(13,723)** | **$(39,917)** | **$(27,747)** | | Loss on extinguishment of debt | — | **$(53,235)** | — | **$(53,235)** | | Other income, net | **$666** | **$2,454** | **$1,738** | **$5,231** | | Net loss | **$(12,725)** | **$(61,925)** | **$(53,180)** | **$(903)** | | Net loss per common share - basic and diluted | **$(0.06)** | **$(0.33)** | **$(0.27)** | **$(0.01)** | | Weighted-average shares outstanding - basic and diluted | **197,546,239** | **188,793,816** | **196,841,011** | **179,026,191** | | Comprehensive loss | **$(12,725)** | **$(61,925)** | **$(53,180)** | **$(903)** | [Condensed Statements of Stockholders' Deficit](index=5&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Deficit%20for%20the%20three%20and%20six%20month%20periods%20ended%20June%2030%2C%202025%20and%202024) This table outlines changes in the company's stockholders' deficit, including common stock, additional paid-in capital, and accumulated deficit | (in thousands, except share data) | Common Stock Shares (June 30, 2025) | Common Stock Amount (June 30, 2025) | Additional Paid-In Capital (June 30, 2025) | Accumulated Deficit (June 30, 2025) | Total Stockholders' Deficit (June 30, 2025) | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at December 31, 2024 | **195,852,463** | **$196** | **$1,267,109** | **$(1,601,029)** | **$(388,722)** | | Vesting of restricted stock units | **1,291,169** | **$1** | — | — | **$1** | | Vesting of ESPP shares | **346,129** | — | **$500** | — | **$500** | | Stock-based compensation | — | — | **$5,134** | — | **$5,134** | | Issuance of common stock from ATM program, net | **2,665,505** | **$3** | **$2,755** | — | **$2,758** | | Net loss | — | — | — | **$(53,180)** | **$(53,180)** | | Balance at June 30, 2025 | **200,155,266** | **$200** | **$1,275,498** | **$(1,654,209)** | **$(433,509)** | [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20for%20the%20six%20month%20periods%20ended%20June%2030%2C%202025%20and%202024) This table summarizes the cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | **$(54,050)** | **$46,623** | | Net cash (used in) investing activities | — | **$(150)** | | Net cash (used in) provided by financing activities | **$(4,650)** | **$60,583** | | Net (decrease) increase in cash and cash equivalents | **$(58,700)** | **$107,056** | | Cash and cash equivalents at beginning of period | **$144,761** | **$82,248** | | Cash and cash equivalents at end of period | **$86,061** | **$189,304** | [Notes to Condensed Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed interim financial statements [1. The Company and Basis of Presentation](index=7&type=section&id=1.%20The%20Company%20and%20Basis%20of%20Presentation) This note describes the company's business, its focus on biopharmaceutical products, and the basis for financial statement preparation - Esperion Therapeutics, Inc. is a commercial stage biopharmaceutical company focused on developing and commercializing oral, once-daily, non-statin medicines (NEXLETOL®, NEXLIZET®, NILEMDO®, NUSTENDI®) for patients at risk for cardiovascular disease (CVD) and elevated low-density lipoprotein cholesterol (LDL-C)[19](index=19&type=chunk)[20](index=20&type=chunk) - The company's products received expanded indications from the FDA in March **2024** and the European Commission (EC) in May **2024** for cardiovascular risk reduction and expanded LDL-C lowering[20](index=20&type=chunk) - Esperion has sustained annual operating losses since inception and expects these to continue, necessitating potential future funding through collaborations, debt, or equity offerings[22](index=22&type=chunk)[23](index=23&type=chunk) [2. Summary of Significant Accounting Policies](index=8&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles, judgments, and estimates applied in preparing the financial statements - The company operates and manages its business as a single operating segment focused on researching, developing, and commercializing therapies for elevated LDL-C[26](index=26&type=chunk) - A significant concentration of credit risk exists, with three customers accounting for approximately **99%** of trade receivables and **98%** of gross sales for the six months ended June **30**, **2025** and **2024**[29](index=29&type=chunk) - Revenue is primarily derived from collaboration agreements (royalties, bulk tablet sales) and net product sales of NEXLETOL and NEXLIZET in the U.S[30](index=30&type=chunk) Product Sales, Net | Period | Product Sales, Net (in thousands) | | :--- | :--- | | Three Months Ended June 30, 2025 | **$40,274** | | Six Months Ended June 30, 2025 | **$75,187** | - The company is evaluating the impacts of recently issued accounting pronouncements: ASU **2023-09** (Income Taxes, effective Dec **2025**) and ASU **2024-03** (Disaggregation of Income Statement Expenses, effective Dec **2026**)[50](index=50&type=chunk)[51](index=51&type=chunk) [3. Collaborations with Third Parties](index=11&type=section&id=3.%20Collaborations%20with%20Third%20Parties) This note details the company's agreements with external partners for product development, commercialization, and revenue sharing - Under the DSE Agreement, Esperion received **$125.0 million** in **2024** (**$100.0 million** upfront and a **$25.0 million** milestone payment) to resolve a commercial dispute and for EMA approval of updated labels for NILEMDO and NUSTENDI[56](index=56&type=chunk)[58](index=58&type=chunk) Collaboration Revenue from DSE | Period | Collaboration Revenue (in thousands) | | :--- | :--- | | Three Months Ended June 30, 2025 | ~**$41,000** | | Six Months Ended June 30, 2025 | ~**$70,400** | - Otsuka (Japan) filed a New Drug Application (NDA) for bempedoic acid in November **2024**, with expected approval and National Health Insurance (NHI) pricing in the second half of **2025**. Esperion is eligible for up to **$450.0 million** in milestones and tiered **15-30%** royalties[20](index=20&type=chunk)[61](index=61&type=chunk) Collaboration Revenue from DS | Period | Collaboration Revenue (in thousands) | | :--- | :--- | | Three Months Ended June 30, 2025 | **$100** | | Six Months Ended June 30, 2025 | **$500** | - New license and distribution agreements were signed with CSL Seqirus for Australia/New Zealand (Feb **2025**) and HLS Therapeutics Inc. for Canada (May **2025**), including upfront/near-term milestone payments and royalties[69](index=69&type=chunk)[70](index=70&type=chunk) [4. Inventories, net](index=13&type=section&id=4.%20Inventories%2C%20net) This note provides a breakdown of the company's inventory components and related valuation adjustments Inventories, Net | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw materials | **$107,182** | **$84,584** | | Work in process | **$3,785** | **$3,711** | | Finished goods | **$3,499** | **$6,196** | | Total Inventories, net | **$114,466** | **$94,491** | | Inventory reserves | **$4,500** | **$300** | [5. Commitments and Contingencies (ANDA Litigation)](index=14&type=section&id=5.%20Commitments%20and%20Contingencies) This note describes the company's legal obligations and potential liabilities, particularly regarding ANDA litigation - The company is involved in ANDA litigation against nine pharmaceutical companies seeking approval for generic versions of NEXLETOL and/or NEXLIZET[72](index=72&type=chunk)[74](index=74&type=chunk) - Settlement agreements were reached with Micro Labs, Hetero USA, and Accord Healthcare Inc., preventing them from marketing generic NEXLETOL in the U.S. prior to April **19**, **2040**[75](index=75&type=chunk) - The patent litigation against the remaining defendants is ongoing, with a trial anticipated to begin no earlier than January **2027**[76](index=76&type=chunk) [6. Cash Equivalents](index=14&type=section&id=6.%20Cash%20Equivalents) This note details the composition of the company's cash equivalents and related interest income Cash Equivalents | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Money market funds | **$66,840** | **$106,894** | | Certificates of deposit | **$404** | **$403** | | Total | **$67,244** | **$107,297** | Interest Income on Cash Equivalents | Period | Interest Income (in thousands) | | :--- | :--- | | Three Months Ended June 30, 2025 | **$600** | | Three Months Ended June 30, 2024 | **$2,400** | | Six Months Ended June 30, 2025 | **$1,700** | | Six Months Ended June 30, 2024 | **$4,800** | [7. Fair Value Measurements](index=15&type=section&id=7.%20Fair%20Value%20Measurements) This note explains how the company measures certain financial assets and liabilities at fair value Financial Assets Measured at Fair Value (Level 1) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Money market funds | **$66,840** | **$106,894** | | Certificates of deposit | **$404** | **$403** | | Total assets at fair value | **$67,244** | **$107,297** | - All financial assets measured at fair value are classified as Level **1**, indicating they are based on quoted prices for identical assets in active markets[81](index=81&type=chunk) [8. Liability Related to the Revenue Interest Purchase Agreement](index=16&type=section&id=8.%20Liability%20Related%20to%20the%20Revenue%20Interest%20Purchase%20Agreement) This note discusses the company's obligations arising from the Revenue Interest Purchase Agreement and its subsequent termination - The Revenue Interest Purchase Agreement (RIPA) with Oberland was repurchased and terminated on June **27**, **2024**, for a cash payment of **$343.8 million**[88](index=88&type=chunk) - A loss on debt extinguishment of **$53.2 million** was recorded for the three and six months ended June **30**, **2024**, due to the RIPA repurchase[89](index=89&type=chunk) Interest Expense Related to RIPA | Period | Interest Expense (in thousands) | | :--- | :--- | | Three Months Ended June 30, 2025 | — | | Three Months Ended June 30, 2024 | ~**$10,600** | | Six Months Ended June 30, 2025 | — | | Six Months Ended June 30, 2024 | ~**$21,600** | [9. Sale of Future Royalties](index=17&type=section&id=9.%20Sale%20of%20Future%20Royalties) This note describes the transaction involving the sale of future royalty streams and the associated liability - On June **27**, **2024**, Esperion sold a portion of future royalties from DSE net sales to OCM IP Healthcare Portfolio LP (OMERS) for **$304.7 million**, treated as a debt instrument[92](index=92&type=chunk)[94](index=94&type=chunk) - OMERS will receive **100%** of the Royalty Interests until an aggregate amount of **1.7x** the purchase price (**$517.9 million**) is received, after which royalties revert to Esperion[93](index=93&type=chunk) Royalty Sale Liability and Interest Expense | Metric | June 30, 2025 (in thousands) | | :--- | :--- | | Royalty sale liability, net | **$295,912** | | Interest expense (3 months ended June 30, 2025) | **$13,300** | | Interest expense (6 months ended June 30, 2025) | **$26,400** | | Effective annual imputed interest rate | **1.5%** | | Royalties recognized and settled to Purchaser (6 months ended June 30, 2025) | **$(24,061)** | [10. Debt](index=18&type=section&id=10.%20Debt) This note provides details on the company's various debt instruments, including term loans and convertible notes - On December **13**, **2024**, the company entered into a Credit Agreement for a **$150.0 million** term loan, bearing interest at **9.75%** (cash) or **11.75%** (paid-in-kind) annually, maturing December **13**, **2029**[99](index=99&type=chunk)[100](index=100&type=chunk) Debt Balances and Interest Expense | Debt Type | Principal Amount (June 30, 2025, in thousands) | Net Carrying Amount (June 30, 2025, in thousands) | Interest Expense (3 months ended June 30, 2025, in thousands) | Interest Expense (6 months ended June 30, 2025, in thousands) | | :--- | :--- | :--- | :--- | :--- | | Term Loan | **$150,000** (approx.) | **$146,452** | **$5,000** | **$9,100** | | 2025 Notes | **$54,900** | **$54,766** | **$700** | **$1,300** | | 2030 Notes | **$100,000** | **$96,998** | **$1,500** | **$3,100** | - The company issued **$100.0 million** aggregate principal amount of **5.75%** Convertible Senior Subordinated Notes due June **2030** on December **17**, **2024**, with an initial conversion price of approximately **$3.06** per share[116](index=116&type=chunk)[117](index=117&type=chunk) Estimated Future Principal Payments | Years Ending December 31, | (in thousands) | | :--- | :--- | | 2025 | **$54,912** | | 2026 | — | | 2027 | — | | 2028 | **$19,301** | | 2029 | **$135,105** | | 2030 | **$100,000** | | Total | **$309,318** | [11. Other Accrued Liabilities](index=22&type=section&id=11.%20Other%20Accrued%20Liabilities) This note itemizes various accrued expenses and short-term obligations of the company Other Accrued Liabilities | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued legal fees | **$3,753** | **$698** | | Accrued compensation | **$8,370** | **$12,739** | | Accrued professional fees | **$2,202** | **$3,557** | | Accrued interest on convertible notes | **$530** | **$1,229** | | Accrued other | **$600** | **$1,370** | | Total other accrued liabilities | **$15,455** | **$19,593** | [12. Stock Compensation](index=22&type=section&id=12.%20Stock%20Compensation) This note explains the company's stock-based compensation plans and the associated expense recognition - The **2022** Stock Option and Incentive Plan's reserved shares increased to **23,150,000** in May **2025**[131](index=131&type=chunk) Stock-Based Compensation Expense | (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Research and development | **$412** | **$781** | | Selling, general and administrative | **$2,257** | **$4,353** | | Total stock compensation expense | **$2,669** | **$5,134** | Outstanding Stock Options and RSUs | Metric | June 30, 2025 | | :--- | :--- | | Stock Options Outstanding | **6,864,243** | | RSUs Outstanding and Unvested | **8,034,122** | | Unrecognized stock-based compensation expense (unvested options) | **$4,900** (over **2.6** years) | | Unrecognized stock-based compensation expense (unvested RSUs) | **$15,000** (over **2.9** years) | [13. Income Taxes](index=25&type=section&id=13.%20Income%20Taxes) This note discusses the company's income tax position, including deferred tax assets and valuation allowances - No provision for income taxes was recorded for the three and six months ended June **30**, **2025** and **2024**, due to sustained annual operating losses since inception[142](index=142&type=chunk) - A full valuation allowance has been applied against net deferred tax assets, as it is not more likely than not that the company will realize their benefit[142](index=142&type=chunk) - The company is evaluating the implications of the One Big Beautiful Bill Act (OBBBA), signed July **4**, **2025**, which includes changes to corporate taxation such as R&D expense capitalization and interest expense limitations[143](index=143&type=chunk) [14. Segment Reporting](index=25&type=section&id=14.%20Segment%20Reporting) This note clarifies the company's operating segments and the breakdown of its revenue streams - The company operates as a single reportable segment, focusing on researching, developing, and commercializing therapies for elevated LDL-C[144](index=144&type=chunk) Segment Revenue Breakdown | Revenue Type | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :--- | :--- | :--- | | Net product sales | **$40,300** | **$75,200** | | Collaboration revenue | **$42,100** | **$72,200** | - Collaboration revenue for the periods ended June **30**, **2025**, was primarily derived from the company's European partner, DSE[144](index=144&type=chunk) [15. Stockholders' Deficit](index=26&type=section&id=15.%20Stockholders'%20Deficit) This note provides further details on changes in the company's equity, including stock issuances and warrants - The January **2024** public offering generated approximately **$90.7 million** in net proceeds from the sale of **65,205,000** shares of Common Stock[146](index=146&type=chunk) - Under the **2023** ATM Program, **2,665,505** shares of Common Stock were issued during the six months ended June **30**, **2025**, yielding approximately **$2.8 million** in net proceeds[147](index=147&type=chunk) Warrants Outstanding | Warrant Type | June 30, 2025 | December 31, 2024 | Weighted-Average Exercise Price | | :--- | :--- | :--- | :--- | | From Warrant Amendment Agreements | **6,071,429** | **6,071,429** | **$1.55** | | From 2023 Purchase Agreement | **20,000,000** | **20,000,000** | **$1.55** | | Total warrants outstanding | **26,071,429** | **26,071,429** | | [16. Net Loss Per Common Share](index=27&type=section&id=16.%20Net%20Loss%20Per%20Common%20Share) This note presents the calculation of basic and diluted net loss per common share Net Loss Per Common Share | Period | Net Loss Per Common Share - Basic and Diluted | | :--- | :--- | | Three Months Ended June 30, 2025 | **$(0.06)** | | Six Months Ended June 30, 2025 | **$(0.27)** | - A total of **76,180,919** potential dilutive shares were excluded from the calculation of diluted net loss per share for the six months ended June **30**, **2025**, due to their anti-dilutive effect[155](index=155&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the company's financial condition, operating results, liquidity, and capital resources for the interim periods [Forward-Looking Statements](index=29&type=section&id=Forward-Looking%20Statements) This section cautions that statements made are forward-looking and subject to risks and uncertainties that could cause actual results to differ - This section contains forward-looking statements based on management's beliefs and assumptions, which involve known and unknown risks and uncertainties that could cause actual results to differ materially[157](index=157&type=chunk)[158](index=158&type=chunk) [Overview](index=29&type=section&id=Overview) This section provides a high-level summary of the company's business, product portfolio, recent developments, and financial outlook - Esperion is a commercial stage biopharmaceutical company focused on FDA-approved oral, once-daily, non-statin medicines (NEXLETOL®, NEXLIZET®) for cardiovascular disease and elevated LDL-C[160](index=160&type=chunk)[161](index=161&type=chunk) - The company received expanded indications for its products from the FDA in March **2024** and the EC in May **2024**, and its Japanese collaborator, Otsuka, filed an NDA in November **2024** with expected approval in H**2** **2025**[161](index=161&type=chunk)[162](index=162&type=chunk) - Esperion has incurred net losses since inception and expects continued operating losses, requiring additional financing to support ongoing commercialization and research and development activities[163](index=163&type=chunk)[164](index=164&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section discusses accounting policies requiring management's most difficult, subjective, or complex judgments and estimates - The preparation of financial statements requires management to make estimates and judgments, particularly concerning net product sales and royalty purchase agreements, with actual results potentially differing from these estimates[182](index=182&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, comparing revenues and expenses over different periods [Comparison of the Three Months Ended June 30, 2025 and 2024](index=33&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares the company's financial results for the second quarter of 2025 against the same period in 2024 Financial Performance (Three Months Ended June 30) | (in thousands) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Product sales, net | **$40,274** | **$28,302** | **$11,972** (↑**42.3%**) | | Collaboration revenue | **$42,111** | **$45,532** | **$(3,421)** (↓**7.5%**) | | Cost of goods sold | **$28,543** | **$15,609** | **$12,934** (↑**82.9%**) | | Research and development | **$7,238** | **$11,461** | **$(4,223)** (↓**36.8%**) | | Selling, general and administrative | **$39,509** | **$44,185** | **$(4,676)** (↓**10.6%**) | | Income from operations | **$7,095** | **$2,579** | **$4,516** (↑**175.1%**) | | Interest expense | **$(20,486)** | **$(13,723)** | **$(6,763)** (↑**49.3%**) | | Loss on extinguishment of debt | — | **$(53,235)** | **$53,235** (↓**100%**) | | Net loss | **$(12,725)** | **$(61,925)** | **$49,200** (↓**79.4%**) | - The significant decrease in net loss for Q**2** **2025** compared to Q**2** **2024** was primarily due to the absence of a **$53.2 million** loss on extinguishment of debt in **2025**[184](index=184&type=chunk)[191](index=191&type=chunk) - Product sales increased due to higher prescription volumes, while collaboration revenue decreased primarily due to a one-time settlement payment received in Q**2** **2024**[185](index=185&type=chunk)[186](index=186&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=34&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares the company's financial performance for the first half of 2025 against the same period in 2024 Financial Performance (Six Months Ended June 30) | (in thousands) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Product sales, net | **$75,187** | **$53,058** | **$22,129** (↑**41.7%**) | | Collaboration revenue | **$72,193** | **$158,511** | **$(86,318)** (↓**54.5%**) | | Cost of goods sold | **$60,081** | **$25,684** | **$34,397** (↑**133.9%**) | | Research and development | **$19,795** | **$24,864** | **$(5,069)** (↓**20.4%**) | | Selling, general and administrative | **$82,505** | **$86,173** | **$(3,668)** (↓**4.3%**) | | Income (loss) from operations | **$(15,001)** | **$74,848** | **$(89,849)** (↓**120.0%**) | | Interest expense | **$(39,917)** | **$(27,747)** | **$(12,170)** (↑**43.8%**) | | Loss on extinguishment of debt | — | **$(53,235)** | **$53,235** (↓**100%**) | | Net loss | **$(53,180)** | **$(903)** | **$(52,277)** (↑**5789.3%**) | - The substantial increase in net loss for the six months ended June **30**, **2025**, was primarily driven by an **$86.3 million** decrease in collaboration revenue (due to a one-time settlement in **2024**) and higher cost of goods sold and interest expense[193](index=193&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[199](index=199&type=chunk) - Product sales increased by **$22.1 million** due to prescription growth, while R&D and SG&A expenses decreased[194](index=194&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to generate and manage cash, its funding sources, and future capital requirements - As of June **30**, **2025**, primary liquidity sources were cash and cash equivalents totaling **$86.1 million**[208](index=208&type=chunk) Cash Flow Summary (Six Months Ended June 30) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | **$(54,050)** | **$46,623** | | Net cash (used in) investing activities | — | **$(150)** | | Net cash (used in) provided by financing activities | **$(4,650)** | **$60,583** | | Net (decrease) increase in cash and cash equivalents | **$(58,700)** | **$107,056** | | Cash and cash equivalents at beginning of period | **$144,761** | **$82,248** | | Cash and cash equivalents at end of period | **$86,061** | **$189,304** | - Key financing activities in **2024** included **$125.0 million** from the DSE Settlement, **$90.7 million** from a public offering, **$304.7 million** from a royalty sale, and a **$150.0 million** term loan. In **2025**, the ATM program generated **$2.8 million**[204](index=204&type=chunk)[205](index=205&type=chunk)[203](index=203&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - The company anticipates current cash, future product sales, and collaboration revenues will fund operations for the foreseeable future, but may seek additional financing due to ongoing operating losses and R&D expenses[207](index=207&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section reports no material changes to market risk disclosures since the December 31, 2024 Annual Report on Form 10-K - No material changes to quantitative and qualitative disclosures about market risk since the Annual Report on Form **10-K** for the fiscal year ended December **31**, **2024**[225](index=225&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of June 30, 2025, due to a material weakness in inventory accounting, though financial statements are fairly presented - The company's disclosure controls and procedures were not effective as of June **30**, **2025**[228](index=228&type=chunk) - A material weakness in internal control over financial reporting was identified, related to the accounting for inventory held at a third-party contract manufacturing organization[229](index=229&type=chunk)[243](index=243&type=chunk) - Management is designing and implementing enhanced controls to remediate the material weakness, focusing on inventory existence and movements between contract manufacturing organizations[231](index=231&type=chunk)[244](index=244&type=chunk) - Despite the material weakness, management concluded that the condensed financial statements for the periods presented are fairly presented in conformity with U.S. GAAP[230](index=230&type=chunk) [PART II — OTHER INFORMATION](index=41&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 5 for details on ANDA litigation and anticipates no material adverse impact from other legal matters - Information on legal proceedings, including ANDA litigation, is incorporated by reference from Note **5** to the condensed financial statements[233](index=233&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section outlines new or materially changed risk factors, including internal control weaknesses, regulatory pressures, and macroeconomic volatility - A material weakness in internal control over financial reporting has been identified, which could impair the ability to produce accurate and timely financial statements and harm operating results[237](index=237&type=chunk)[240](index=240&type=chunk)[242](index=242&type=chunk) - Inadequate funding for government agencies (FDA, SEC) or other disruptions could hinder timely product development, commercialization, and regulatory reviews[246](index=246&type=chunk)[247](index=247&type=chunk) - Recent federal legislation, including the Inflation Reduction Act of **2022** (IRA) and the One Big Beautiful Bill Act of **2025** (OBBBA), along with executive orders, may increase pressure to reduce pharmaceutical product prices paid by Medicare, potentially adversely affecting revenue[248](index=248&type=chunk)[249](index=249&type=chunk)[253](index=253&type=chunk) - Unfavorable macroeconomic conditions, market volatility from geopolitical developments, high inflation, and rising interest rates could adversely affect business operations, demand for products, and ability to raise capital[256](index=256&type=chunk)[259](index=259&type=chunk) - Changes in tax law, such as those introduced by the OBBBA, could adversely affect the company's business and financial condition[261](index=261&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter - No Rule **10b5-1** or non-Rule **10b5-1** trading arrangements were adopted or terminated by directors or officers during the quarter ended June **30**, **2025**[262](index=262&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with this Quarterly Report on Form 10-Q, including corporate governance documents and certifications - The exhibit index lists various documents, including the Amended and Restated Certificate of Incorporation, Bylaws, specimen common stock certificate, and certifications of principal executive and financial officers[265](index=265&type=chunk)