Esperion(ESPR) - 2023 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION This section provides Esperion Therapeutics, Inc.'s unaudited condensed financial statements and management's discussion and analysis Item 1. Financial Statements This section presents Esperion Therapeutics, Inc.'s unaudited condensed financial statements for the periods ended June 30, 2023, and December 31, 2022, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' deficit, and statements of cash flows, along with detailed notes explaining significant accounting policies, collaboration agreements, commitments, and other financial details Condensed Balance Sheets This section presents the company's financial position, including assets, liabilities, and stockholders' deficit, as of June 30, 2023, and December 31, 2022 | (in thousands) | June 30, 2023 (unaudited) | December 31, 2022 | | :--------------------------------- | :-------------------------- | :------------------ | | Assets | | | | Cash and cash equivalents | $138,470 | $124,775 | | Short-term investments | — | $42,086 | | Accounts receivable | $40,799 | $33,729 | | Inventories, net | $45,676 | $35,201 | | Total current assets | $232,125 | $246,683 | | Total assets | $234,626 | $247,939 | | Liabilities and stockholders' equity | | | | Total current liabilities | $107,173 | $92,308 | | Convertible notes, net | $260,738 | $259,899 | | Revenue interest liability | $236,990 | $218,845 | | Total liabilities | $606,604 | $571,717 | | Total stockholders' deficit | $(371,978) | $(323,778) | Condensed Statements of Operations and Comprehensive Loss This section details the company's revenues, operating expenses, and net loss for the three and six months ended June 30, 2023, and 2022 | (in thousands, except share and per share data) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues: | | | | | | Product sales, net | $20,293 | $13,578 | $37,324 | $26,932 | | Collaboration revenue | $5,493 | $5,263 | $12,791 | $10,745 | | Total Revenues | $25,786 | $18,841 | $50,115 | $37,677 | | Operating expenses: | | | | | | Cost of goods sold | $6,786 | $9,176 | $18,438 | $16,301 | | Research and development | $22,099 | $32,432 | $53,480 | $56,751 | | Selling, general and administrative | $33,959 | $29,609 | $63,860 | $59,990 | | Total operating expenses | $62,844 | $71,217 | $135,778 | $133,042 | | Loss from operations | $(37,058) | $(52,376) | $(85,663) | $(95,365) | | Interest expense | $(14,537) | $(14,266) | $(28,924) | $(28,328) | | Other income, net | $1,660 | $318 | $2,933 | $638 | | Net loss | $(49,935) | $(66,324) | $(111,654) | $(123,055) | | Net loss per common share - basic and diluted | $(0.46) | $(1.05) | $(1.19) | $(1.98) | Condensed Statements of Stockholders' Deficit This section outlines changes in the company's stockholders' deficit, including common stock, additional paid-in capital, and accumulated deficit, for the six months ended June 30, 2023 - Total stockholders' deficit increased from $(323,778) thousand at December 31, 2022, to $(371,978) thousand at June 30, 2023, primarily due to a net loss of $(49,935) thousand for the quarter[8][13] - Common stock shares issued increased significantly from 74,570,198 at December 31, 2022, to 100,870,527 at June 30, 2023, driven by issuance of common stock, warrants, and pre-funded warrants (12,205,000 shares), ATM program issuances (3,312,908 shares), and exercise of pre-funded warrants (10,098,747 shares)[13] - Additional paid-in capital increased from $1,071,183 thousand to $1,134,609 thousand, reflecting proceeds from stock issuances and stock-based compensation[13] Condensed Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023, and 2022 | (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(79,106) | $(89,522) | | Net cash provided by (used in) investing activities | $42,500 | $(13,102) | | Net cash provided by financing activities | $50,301 | $16,672 | | Net increase (decrease) in cash and cash equivalents | $13,695 | $(85,952) | | Cash, cash equivalents and restricted cash at end of period | $138,470 | $172,940 | Notes to Condensed Financial Statements This section provides detailed explanations and disclosures for the financial statements, covering accounting policies, collaboration agreements, and other financial details 1. The Company and Basis of Presentation This section describes Esperion Therapeutics, Inc.'s business, product approvals, key clinical trial results, and ongoing financial condition - Esperion Therapeutics, Inc. is a pharmaceutical company focused on developing and commercializing oral, once-daily, non-statin medicines for elevated LDL-C, with two FDA/EMA/Swissmedic approved products (Bempedoic acid and Bempedoic acid/Ezetimibe combination tablet) since 2020[17] - The CLEAR Outcomes trial met its primary endpoint on December 7, 2022, demonstrating significant cardiovascular risk reductions with bempedoic acid, including reduced risk of heart attack and coronary revascularization, making it the first LDL-C lowering therapy since statins proven to lower hard ischemic events in both ASCVD and primary prevention patients[18][19] - The Company submitted Supplemental New Drug Applications (sNDAs) to the FDA and a Type II(a) variation to the EMA in June 2023, seeking approval to add cardiovascular risk reduction indications and remove statin limitations for NEXLETOL/NEXLIZET (NILEMDO/NUSTENDI in Europe), with anticipated approvals in the first half of 2024[21][22] - Esperion has sustained annual operating losses since inception and expects them to continue, relying on current cash, product sales, and collaboration agreements to fund operations, while also exploring additional financing options[24][25] 2. Summary of Significant Accounting Policies This section outlines the key accounting principles and methods used in preparing the financial statements, including revenue recognition and inventory valuation - Revenue is recognized when a customer obtains control of promised goods or services, reflecting the expected consideration. The Company derives revenue from collaboration agreements (royalties, supply of bulk tablets) and direct product sales (NEXLETOL and NEXLIZET in the U.S.)[32][39] - Product sales are recorded net of variable consideration, including estimates for rebates, chargebacks, co-pay assistance, distribution fees, product returns, and other discounts, with reserves established for these items[41][42] - Inventories are stated at the lower of cost or net realizable value using the FIFO method, with adjustments for expiration risk or cost exceeding net realizable value recognized in cost of goods sold[48][49] 3. Collaborations with Third Parties This section details the company's agreements with DSE, Otsuka, and Daiichi Sankyo for product development, manufacturing, and commercialization - The Company has collaboration agreements with DSE (Europe, Turkey, Switzerland), Otsuka (Japan), and Daiichi Sankyo Co. Ltd (South Korea, Taiwan, Hong Kong, Thailand, Vietnam, Brazil, Macao, Cambodia, Myanmar) for development, manufacturing, and commercialization of its products[51][57][62] | Collaboration Partner | Period | Collaboration Revenue (in thousands) | | :-------------------- | :----- | :--------------------------------- | | DSE | 3 months ended June 30, 2023 | $5,300 | | DSE | 6 months ended June 30, 2023 | $12,400 | | DSE | 3 months ended June 30, 2022 | $5,000 | | DSE | 6 months ended June 30, 2022 | $10,300 | | DS | 3 months ended June 30, 2023 | $200 | | DS | 6 months ended June 30, 2023 | $400 | | DS | 3 months ended June 30, 2022 | $200 | | DS | 6 months ended June 30, 2022 | $400 | - Future potential milestone payments from collaboration agreements are constrained and not included in the transaction price, as they depend on development activities, regulatory approvals, and sales-based milestones[55][56][60][61][65] 4. Inventories, net This section provides a breakdown of the company's inventory components, including raw materials, work in process, and finished goods | (in thousands) | June 30, 2023 | December 31, 2022 | | :------------- | :------------ | :---------------- | | Raw materials | $43,755 | $26,558 | | Work in process | $1,007 | $6,548 | | Finished goods | $914 | $2,095 | | Total | $45,676 | $35,201 | 5. Commitments and Contingencies This section discusses the company's potential obligations and legal disputes, particularly regarding a $300 million milestone payment from DSE - The Company believes it is entitled to a $300 million milestone payment from DSE upon inclusion of cardiovascular risk reduction data in the EU label, based on CLEAR Outcomes data showing a relative risk reduction rate equal to or greater than 20%[67] - DSE disputes the Company's assessment regarding the milestone payment, leading Esperion to file a complaint in the U.S. District Court for the Southern District of New York on March 27, 2023, seeking a judicial declaration for the $300 million payment[68][69][70] - Any delay or failure to receive the DSE milestone payment could significantly impact the Company's future capital needs, revenue recognition, and ability to fund operations[68] 6. Investments This section details the company's investment portfolio, including money market funds, certificates of deposit, and U.S. treasury notes, and related interest income | (in thousands) | June 30, 2023 Fair Value | December 31, 2022 Fair Value | | :--------------- | :----------------------- | :--------------------------- | | Money market funds | $112,110 | $105,078 | | Certificates of deposit | $401 | $401 | | U.S. treasury notes | — | $47,081 | | Total | $112,511 | $152,560 | - Other income, net, included interest income on investments of $1.4 million and $2.3 million for the three and six months ended June 30, 2023, respectively, a significant increase from $0.4 million and $0.7 million in the prior year periods, primarily due to higher interest rates[72] 7. Fair Value Measurements This section explains the valuation methods used for financial assets measured at fair value, primarily money market funds and certificates of deposit - The Company's financial assets measured at fair value on a recurring basis, primarily money market funds and certificates of deposit, are classified as Level 1 inputs, indicating they are valued using quoted prices in active markets for identical assets[75][76] | (in thousands) | June 30, 2023 Total Fair Value | December 31, 2022 Total Fair Value | | :--------------- | :----------------------------- | :--------------------------------- | | Money market funds | $112,110 | $105,078 | | Certificates of deposit | $401 | $401 | | U.S. treasury notes | — | $47,081 | | Total assets at fair value | $112,511 | $152,560 | 8. Liability Related to the Revenue Interest Purchase Agreement This section describes the company's agreement with Oberland, outlining the revenue interest liability and associated interest expense - The Company has a Revenue Interest Purchase Agreement (RIPA) with Oberland, under which it received $125.0 million at closing in 2019, an additional $25.0 million in 2020, and a final $50.0 million in April 2021, for a total of $200.0 million[77][81] - As consideration, Oberland receives tiered revenue interests ranging from 3.33% to 10% of the Company's net sales in the Covered Territory (worldwide since 2022), until 225% of the aggregate purchase price ($400 million) is repaid[78][81][87][89] - The revenue interest liability was $259.8 million as of June 30, 2023, with an effective annual imputed interest rate of 18.1%. Interest expense related to this liability was $11.5 million and $22.8 million for the three and six months ended June 30, 2023, respectively[87][88][90] | (in thousands) | Amount | | :------------------------------------ | :----- | | Total revenue interest liability at December 31, 2022 | $243,605 | | Interest expense recognized | $22,785 | | Revenue Interests payments | $(6,616) | | Total revenue interest liability at June 30, 2023 | $259,774 | 9. Convertible Notes This section details the company's 4.0% senior subordinated convertible notes due November 2025, including their carrying amount, interest expense, and fair value - In November 2020, the Company issued $280.0 million aggregate principal amount of 4.0% senior subordinated convertible notes due November 2025, with a net carrying amount of $260.7 million as of June 30, 2023[92][100] - Interest expense on convertible notes was $3.0 million and $6.1 million for the three and six months ended June 30, 2023, respectively. The estimated fair value of the Convertible Notes was $133.3 million as of June 30, 2023[101][102] - The Company entered into capped call transactions ($46.0 million cost) to reduce potential dilution from conversion and a prepaid forward stock repurchase transaction ($55.0 million cost) for 1,994,198 shares, treated as treasury stock[103][105] 10. Other Accrued Liabilities This section provides a breakdown of various accrued liabilities, including compensation, professional fees, and interest on convertible notes | (in thousands) | June 30, 2023 | December 31, 2022 | | :--------------- | :------------ | :---------------- | | Accrued compensation | $6,987 | $9,053 | | Accrued professional fees | $4,494 | $2,547 | | Accrued interest on convertible notes | $1,325 | $1,325 | | Accrued other | $45 | $279 | | Total other accrued liabilities | $12,851 | $13,204 | 11. Stock Compensation This section outlines the company's stock option and incentive plans, employee stock purchase plan, and associated stock-based compensation expenses - The 2022 Stock Option and Incentive Plan was approved in May 2022, with an amendment in June 2023 increasing reserved shares to 10,650,000. The Employee Stock Purchase Plan (ESPP) allows eligible employees to purchase shares at a discount[107][108] | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :---------------------------------------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | ESPP | $100 | $200 | $100 | $200 | | Stock Options | $1,000 | $2,000 | $1,400 | $2,900 | | Performance-Based Stock Options (PBSOs) | $200 | $400 | $100 | $200 | | Restricted Stock Units (RSUs) | $1,800 | $3,300 | $1,700 | $3,600 | | Performance-based Restricted Stock Units (PBRSUs) | $100 | $200 | $300 | $1,100 | - As of June 30, 2023, unrecognized stock-based compensation expense totaled $8.3 million for unvested options (over 2.7 years), $0.8 million for unvested PBSOs (over 1.0 years), and $16.7 million for unvested RSUs (over 2.8 years), and $0.6 million for unvested PBRSUs (over 1.0 years)[109][112][113][115] 12. Income Taxes This section explains the company's income tax position, noting no provision for income taxes due to historical operating losses and a full valuation allowance - No provision for income taxes was recorded for the three and six months ended June 30, 2023 and 2022, due to the Company's history of annual operating losses since inception. A full valuation allowance has been applied against net deferred tax assets[116] 13. Stockholders' Deficit This section details changes in the company's equity, including common stock issuances, warrants, and pre-funded warrants from various offerings - The Company issued 3,312,908 shares of common stock through its 2023 ATM Program, generating net proceeds of approximately $4.4 million for the six months ended June 30, 2023[118] - A registered direct offering closed on March 22, 2023, issuing 12,205,000 shares of common stock, 20,965,747 pre-funded warrants, and 33,170,747 warrants, generating net proceeds of approximately $51.3 million. Existing warrants were also amended, reducing their exercise price to $1.55 and extending expiration to September 22, 2026, for an additional $1.1 million net proceeds[120][121][122][123] | Warrants and Pre-funded Warrants Outstanding | June 30, 2023 | December 31, 2022 | Weighted-average exercise price | | :------------------------------------------- | :------------ | :---------------- | :------------------------------ | | Warrants from 2021 agreement | 27,940,074 | 36,964,286 | $9.00 | | Warrants from Warrant Amendment Agreements | 9,024,212 | — | $1.55 | | Warrants from Purchase Agreement | 33,170,747 | — | $1.55 | | Pre-funded warrants outstanding | 10,867,000 | — | $0.001 | | Total | 81,002,033 | 36,964,286 | | 14. Net Loss Per Common Share This section presents the basic and diluted net loss per common share and discusses potential dilutive shares excluded from calculations - Basic and diluted net loss per common share was $(0.46) and $(1.19) for the three and six months ended June 30, 2023, respectively, an improvement from $(1.05) and $(1.98) for the same periods in 2022[10] - A significant number of potential dilutive shares, including common shares under option, PBSOs, unvested RSUs and PBRSUs, ESPP shares, convertible notes, and warrants, were excluded from diluted EPS calculation due to their anti-dilutive effect, totaling 86,332,196 shares as of June 30, 2023[125][126] 15. Statements of Cash Flows and Restricted Cash This section provides a reconciliation of cash, cash equivalents, and restricted cash at different reporting periods | (in thousands) | June 30, 2023 | June 30, 2022 | December 31, 2022 | December 31, 2021 | | :--------------- | :------------ | :------------ | :---------------- | :---------------- | | Cash and cash equivalents | $138,470 | $122,940 | $124,775 | $208,892 | | Restricted cash | — | $50,000 | — | $50,000 | | Total cash and cash equivalents and restricted cash | $138,470 | $172,940 | $124,775 | $258,892 | 16. Subsequent Events This section discloses significant events that occurred after the reporting period, such as the termination of a licensing agreement - On July 6, 2023, the Company provided notice to Serometrix of its intent to terminate the licensing agreement related to its oral, small molecule PCSK9 inhibitor program, effective August 5, 2023, while continuing to advance internal pipeline assets[128] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, highlighting key business developments, product performance, and financial trends for the three and six months ended June 30, 2023, compared to the prior year. It also discusses liquidity, capital resources, and future funding requirements Forward-Looking Statements This section cautions readers about statements regarding future events, emphasizing inherent risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements regarding clinical development, commercialization plans, future financial performance, and potential expanded indications for bempedoic acid and its combination tablet, which are subject to known and unknown risks and uncertainties[131][132] - Readers are cautioned not to place undue reliance on these statements, as actual results may differ materially due to various factors, including those discussed in the 'Risk Factors' section[132] Overview This section provides a high-level summary of the company's business, product portfolio, key clinical trial outcomes, and financial performance Corporate Overview This section introduces Esperion's core business, product approvals, significant clinical trial results, and ongoing financial challenges - Esperion is a pharmaceutical company focused on non-statin medicines for elevated LDL-C, with FDA/EMA/Swissmedic approved products NEXLETOL and NEXLIZET (NILEMDO and NUSTENDI in Europe) since 2020[135] - The CLEAR Outcomes trial successfully met its primary endpoint on December 7, 2022, demonstrating significant cardiovascular risk reductions with bempedoic acid, including reduced risk of heart attack and coronary revascularization[136][137][138] - The Company submitted sNDAs to the FDA and a Type II(a) variation to the EMA in June 2023 for cardiovascular risk reduction indications and removal of statin limitations, with anticipated approvals in the first half of 2024[140] - Esperion is in a dispute with DSE regarding a $300 million milestone payment related to the EU label inclusion of cardiovascular risk reduction data, having filed a complaint seeking judicial declaration[141][142] - The Company has incurred significant operating losses since inception ($49.9 million and $111.7 million for the three and six months ended June 30, 2023, respectively) and expects these losses to continue due to ongoing commercialization and R&D activities, necessitating potential additional financing[145][146] Product Overview This section describes the company's key pharmaceutical products, NEXLETOL and NEXLIZET, including their mechanisms of action and approved indications - NEXLETOL (bempedoic acid) is a first-in-class ATP Citrate Lyase (ACL) inhibitor, approved by the FDA in February 2020, that lowers LDL-C by an average of 18% when used with statins[147] - NEXLIZET (bempedoic acid and ezetimibe) combines two complementary mechanisms to lower LDL-C by a mean of 38% compared to placebo when added to maximally tolerated statins, also approved by the FDA in February 2020[148] - NILEMDO (bempedoic acid) and NUSTENDI (bempedoic acid and ezetimibe) are the European equivalents, approved by the EC in March 2020 for primary hypercholesterolemia or mixed dyslipidemia, with specific indications for use with statins or in statin-intolerant patients[149][150] Financial Operations Overview This section explains the primary components of the company's revenues and expenses, providing context for financial performance Product sales, net This section focuses on the revenue generated from the commercialization of NEXLETOL and NEXLIZET in the U.S - Product sales, net, are derived from the commercialization of NEXLETOL and NEXLIZET in the U.S., which became commercially available in March and June 2020, respectively[152] Collaboration revenue This section details income derived from agreements with third-party partners, including royalties and bulk tablet sales - Collaboration revenue primarily stems from agreements with DSE, Otsuka, and DS, including royalties from product commercialization and sales of bulk tablets under supply agreements to partners[153] Cost of goods sold This section outlines the direct costs associated with the production and sale of NEXLETOL and NEXLIZET, and supply agreements - Cost of goods sold relates to net product sales of NEXLETOL and NEXLIZET, as well as costs associated with supply agreements with collaboration partners[154] Research and Development Expenses This section covers the costs incurred for developing bempedoic acid and its combination tablet, including clinical studies and regulatory activities - R&D expenses primarily cover costs for developing bempedoic acid and its combination tablet, including clinical studies, manufacturing materials, employee-related expenses, and regulatory compliance[155] - R&D expenses are expected to decrease in the second half of 2023 following the reporting of CLEAR Outcomes CVOT results and regulatory submissions to the FDA and EMA in the first half of 2023[156][157] Selling, General and Administrative Expenses This section describes the non-research and development costs related to sales, marketing, and overall corporate administration - SG&A expenses include salaries, stock-based compensation, facility costs, communication expenses, and professional fees for sales, executive, accounting, commercial, and administrative functions[158] - SG&A expenses are anticipated to increase at the end of 2023 due to potential additional global regulatory approvals for new product indications, expanded commercialization initiatives, and increased headcount[159] Interest Expense This section explains the costs associated with the company's debt obligations, including the Revenue Interest Purchase Agreement and convertible notes - Interest expense is primarily associated with the Revenue Interest Purchase Agreement (RIPA) with Oberland and the convertible notes issued in November 2020[160] Other Income, Net This section summarizes miscellaneous non-operating income, primarily from interest on investments and sale of lease vehicles - Other income, net, mainly consists of interest income and the accretion or amortization of premiums and discounts on cash, cash equivalents, and investment securities, as well as income from the sale of lease vehicles[161] Critical Accounting Policies and Significant Judgments and Estimates This section discusses the key accounting policies and the significant management judgments and estimates used in preparing the financial statements - The preparation of financial statements requires management to make estimates and assumptions affecting reported amounts, which are evaluated on an ongoing basis using historical experience, trends, and contractual milestones[162] - There have been no material changes to the significant accounting policies previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022[163] Results of Operations This section provides a comparative analysis of the company's financial performance across different reporting periods Comparison of the Three Months Ended June 30, 2023 and 2022 This section analyzes the financial performance for the recent three-month period, highlighting changes in revenues, expenses, and net loss | (in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :----- | | Product sales, net | $20,293 | $13,578 | $6,715 | | Collaboration revenue | $5,493 | $5,263 | $230 | | Cost of goods sold | $6,786 | $9,176 | $(2,390) | | Research and development | $22,099 | $32,432 | $(10,333) | | Selling, general and administrative | $33,959 | $29,609 | $4,350 | | Net loss | $(49,935) | $(66,324) | $16,389 | - Net product sales increased by $6.7 million (49.5%) to $20.3 million, primarily due to prescription growth of NEXLETOL and NEXLIZET[166] - Research and development expenses decreased by $10.3 million (31.8%) to $22.1 million, mainly due to reduced costs for the CLEAR Outcomes study close-out activities and regulatory submissions[169] - Selling, general and administrative expenses increased by $4.4 million (14.7%) to $34.0 million, driven by upfront training for the contract sales force and increased legal costs[170] Comparison of the Six Months Ended June 30, 2023 and 2022 This section analyzes the financial performance for the recent six-month period, detailing changes in revenues, expenses, and net loss | (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Product sales, net | $37,324 | $26,932 | $10,392 | | Collaboration revenue | $12,791 | $10,745 | $2,046 | | Cost of goods sold | $18,438 | $16,301 | $2,137 | | Research and development | $53,480 | $56,751 | $(3,271) | | Selling, general and administrative | $63,860 | $59,990 | $3,870 | | Net loss | $(111,654) | $(123,055) | $11,401 | - Net product sales increased by $10.4 million (38.6%) to $37.3 million, primarily due to prescription growth of NEXLETOL and NEXLIZET[174] - Collaboration revenue increased by $2.1 million (19.0%) to $12.8 million, mainly due to increased royalty sales growth within partner territories[175] - Research and development expenses decreased by $3.3 million (5.8%) to $53.5 million, primarily due to reduced costs related to the CLEAR Outcomes study following its announcement and presentation[177] Liquidity and Capital Resources This section assesses the company's ability to generate and manage cash, covering operating, investing, and financing activities, and future funding needs Operating Activities This section details the cash flows generated or used by the company's primary business operations - Net cash used in operating activities decreased to $79.1 million for the six months ended June 30, 2023, from $89.5 million in the prior year, primarily due to lower net losses and changes in working capital[184][186] Investing Activities This section summarizes the cash flows resulting from the purchase and sale of long-term assets and investments - Net cash provided by investing activities was $42.5 million for the six months ended June 30, 2023, compared to net cash used of $13.1 million in the prior year, driven by proceeds from sales of highly liquid investments[184][187] Financing Activities This section describes the cash flows related to debt, equity, and other financing transactions - Net cash provided by financing activities increased to $50.3 million for the six months ended June 30, 2023, from $16.7 million in the prior year, primarily due to proceeds from a registered direct offering and the 2023 ATM Program[184][188] - The Company received approximately $51.3 million in net proceeds from a registered direct offering of common stock, pre-funded warrants, and warrants, and $4.4 million in net proceeds from the 2023 ATM Program during the six months ended June 30, 2023[189][191] - The Company's Revenue Interest Purchase Agreement (RIPA) with Oberland involves tiered revenue interests (3.3% to 10%) on net sales, with future payments estimated at $22.8 million in the next year and a maximum total payment of $358.7 million beyond one year[192] Plan of Operations and Funding Requirements This section outlines the company's future operational strategies and anticipated capital needs, considering ongoing expenses and potential financing - The Company anticipates incurring significant expenses and operating losses for the foreseeable future due to ongoing commercialization of NEXLETOL and NEXLIZET and R&D activities[194] - Current cash, cash equivalents, investments, expected product sales, and collaboration revenues are deemed sufficient to fund operations for the foreseeable future, but additional capital may be needed if product sales do not meet expectations[194] - Future funding requirements are subject to numerous risks and uncertainties, including regulatory approvals, collaboration partner performance, intellectual property costs, and the timing of milestone payments, which could significantly impact capital needs[195][196] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to the Company's quantitative and qualitative disclosures about market risk since its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - No material changes have occurred regarding quantitative and qualitative disclosures about market risk since the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022[198] Item 4. Controls and Procedures This section details the Company's evaluation of its disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2023 - As of June 30, 2023, management, with the participation of the principal executive officer and principal financial officer, concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level[200] Changes in Internal Control over Financial Reporting This section reports that no material changes occurred in the company's internal control over financial reporting during the reporting period - There were no changes to the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[201] PART II — OTHER INFORMATION This section covers legal proceedings, risk factors, exhibits, and corporate signatures Item 1. Legal Proceedings This section refers to the legal proceedings detailed in Note 5 to the condensed financial statements, primarily concerning the dispute with DSE over a $300 million milestone payment - Information on legal proceedings is incorporated by reference from Note 5, 'Commitments and Contingencies,' in the condensed financial statements[203] - The Company may become party to future legal matters in the ordinary course of business, but does not anticipate a material adverse impact on its financial position, results of operations, or cash flows from their resolution[204] Item 1A. Risk Factors This section outlines new or materially changed risk factors, emphasizing the potential negative impacts of collaborative partners failing to perform their obligations, particularly the ongoing dispute with DSE over a milestone payment, and the adverse effects of conditions in the banking system and financial markets on the Company's operations and financial results - A key risk factor is the potential for collaborative partners (DSE, Otsuka, DS) to terminate or fail to perform obligations, which could delay or terminate commercialization and milestone payments, as exemplified by the ongoing $300 million milestone payment dispute with DSE[207][208] - The Company's inability to receive or delays in receiving milestone and royalty payments from collaboration partners could significantly impact future capital needs[208][210] - Conditions in the banking system and financial markets, including bank failures, pose a risk to the Company's operations and financial results, potentially threatening access to existing cash, cash equivalents, and investments[212][213][214] Item 6. Exhibits This section provides an index of exhibits filed or furnished as part of this Quarterly Report on Form 10-Q, including organizational documents, stock plans, and certifications - The Exhibit Index lists documents filed or furnished with the Quarterly Report on Form 10-Q, including amendments to the Certificate of Incorporation, the 2022 Stock Option and Incentive Plan, and certifications by executive officers[215][217] Signatures This section contains the duly authorized signatures of Esperion Therapeutics, Inc.'s President and Chief Executive Officer, and Chief Financial Officer, affirming the submission of the report - The report is signed by Sheldon L. Koenig, President and Chief Executive Officer, and Benjamin Halladay, Chief Financial Officer, on August 1, 2023[222]