Esperion(ESPR) - 2022 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements This section presents Esperion Therapeutics, Inc.'s unaudited condensed interim financial statements for Q1 2022, covering balance sheets, operations, equity changes, cash flows, and detailed accounting notes Condensed Balance Sheets Total assets decreased to $342.9 million as of March 31, 2022, from $381.6 million at year-end 2021, while total liabilities increased, widening the stockholders' deficit to $(249.0) million Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $150,364 | $208,892 | | Total Assets | $342,853 | $381,590 | | Total Liabilities | $591,893 | $578,534 | | Total stockholders' deficit | $(249,040) | $(196,944) | Condensed Statements of Operations and Comprehensive Loss The company reported a net loss of $56.7 million or ($0.93) per share in Q1 2022, a significant improvement from $90.9 million or ($3.50) per share in Q1 2021, driven by increased revenues and reduced operating expenses Q1 Statement of Operations (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Product sales, net | $13,354 | $6,350 | | Collaboration revenue | $5,482 | $1,628 | | Total Revenues | $18,836 | $7,978 | | Total operating expenses | $61,825 | $90,802 | | Loss from operations | $(42,989) | $(82,824) | | Net loss | $(56,731) | $(90,935) | | Net loss per share | $(0.93) | $(3.50) | Condensed Statements of Stockholders' Deficit The total stockholders' deficit widened to $(249.0) million as of March 31, 2022, primarily due to the $56.7 million net loss incurred during the quarter - The stockholders' deficit widened to $(249.0) million at the end of Q1 2022, primarily due to the net loss of $56.7 million for the period[16] Condensed Statements of Cash Flows Net cash used in operating activities significantly improved to $39.0 million in Q1 2022 from $89.1 million in Q1 2021, with overall cash and equivalents decreasing by $58.5 million to $200.4 million Cash Flow Summary (in thousands) | Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,990) | $(89,068) | | Net cash used in investing activities | $(18,102) | $0 | | Net cash (used in) provided by financing activities | $(1,436) | $2,045 | | Net decrease in cash and cash equivalents | $(58,528) | $(87,023) | Notes to Condensed Financial Statements These notes provide detailed information on significant accounting policies, collaboration agreements, debt instruments, and other material financial items supporting the condensed financial statements - The company recognizes revenue from product sales (NEXLETOL and NEXLIZET) when the customer obtains control, net of variable consideration like rebates and co-pay assistance[38][39][40] - Collaboration revenue in Q1 2022 of $5.3 million was primarily from royalty revenue and sales of bulk tablets to partner DSE[55] - The Revenue Interest Purchase Agreement (RIPA) liability stood at $266.8 million as of March 31, 2022, with $11.0 million in non-cash interest expense recognized in Q1 2022[87][90][93] - The company has $265.0 million in principal of 4.0% convertible notes due 2025, with a net carrying amount of $258.7 million as of March 31, 2022[94][108] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes the company's Q1 2022 financial performance and condition, covering business overview, COVID-19 impact, operational results, and liquidity, highlighting revenue growth and expense reduction amidst ongoing losses Overview The company focuses on commercializing its oral, non-statin LDL-C lowering medicines, NEXLETOL and NEXLIZET, while advancing the pivotal CLEAR Outcomes trial with results expected in Q1 2023 - The company's primary focus is on developing and commercializing oral, once-daily, non-statin medicines for patients with elevated LDL-C[138] - The CLEAR Outcomes trial is expected to report top-line results in the first quarter of 2023, intended to support submissions for a CV risk reduction indication[152] The COVID-19 Pandemic The COVID-19 pandemic has adversely impacted commercialization efforts by limiting sales access to physicians, leading to a 40% corporate workforce reduction in October 2021 to align cost structure - The pandemic has adversely affected commercialization efforts due to limited in-person access for sales personnel to physicians, impacting new patient starts and treatment volume[159] - To align its operational and expense structure with business realities, the company executed a corporate workforce reduction of approximately 40% in October 2021[160] Results of Operations Q1 2022 saw net product sales increase by $7.0 million and collaboration revenue grow by $3.9 million, while R&D expenses decreased by $3.7 million and SG&A expenses significantly dropped by $30.7 million due to cost savings and a prior-year legal settlement Comparison of Results for the Three Months Ended March 31 (in millions) | Item | 2022 | 2021 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Product sales, net | $13.4 | $6.4 | $7.0 | Prescription growth of NEXLETOL and NEXLIZET | | Collaboration revenue | $5.5 | $1.6 | $3.9 | Increased product sales to partners and higher royalty revenue | | R&D Expenses | $24.3 | $28.0 | $(3.7) | Reduction in alternative supply manufacturing and compensation costs | | SG&A Expenses | $30.4 | $61.1 | $(30.7) | Decreased compensation costs from workforce reduction and a $13.3M legal settlement charge in 2021 | Liquidity and Capital Resources As of March 31, 2022, the company held $268.5 million in cash, equivalents, and investments, deemed sufficient to fund operations beyond the CLEAR Outcomes CVOT readout, with net cash used in operating activities significantly decreasing to $39.0 million in Q1 2022 - The company held $268.5 million in cash, cash equivalents, and investments as of March 31, 2022, including $50 million in restricted cash[187] - Management anticipates that current cash resources are sufficient to complete the CLEAR Outcomes CVOT and fund operations for the foreseeable future beyond the trial's read-out[186] Cash Flow Activity (in thousands) | Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,990) | $(89,068) | | Net cash used in investing activities | $(18,102) | $0 | | Net cash (used in) provided by financing activities | $(1,436) | $2,045 | Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the company's market risk disclosures since its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - There were no material changes to the company's quantitative and qualitative disclosures about market risk from the 2021 Form 10-K[204] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective[206] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[207] PART II — OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings, including a settled class action lawsuit, is incorporated by reference from Note 5 to the condensed financial statements - Information regarding legal proceedings is incorporated by reference from Note 5 to the condensed financial statements, which discusses a settled class action lawsuit[209][68] Item 1A. Risk Factors There have been no significant changes to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - There have been no significant changes from the risk factors disclosed in the company's 2021 Annual Report on Form 10-K[211] Item 6. Exhibits This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including an employment agreement and Sarbanes-Oxley Act certifications - The report includes several exhibits, such as an employment agreement with Eric Warren and certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act[214][215]