Esperion(ESPR) - 2023 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed interim financial statements for Esperion Therapeutics, Inc. as of September 30, 2023, and for the three and nine-month periods then ended Condensed Balance Sheets As of September 30, 2023, total assets decreased to $221.3 million from $247.9 million, while total liabilities increased to $631.3 million from $571.7 million, widening the stockholders' deficit Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 (unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $114,833 | $124,775 | | Inventories, net | $51,435 | $35,201 | | Total current assets | $218,227 | $246,683 | | Total assets | $221,305 | $247,939 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $137,708 | $92,308 | | Convertible notes, net | $261,165 | $259,899 | | Revenue interest liability | $267,400 | $243,605 | | Total liabilities | $631,309 | $571,717 | | Total stockholders' deficit | $(410,004) | $(323,778) | Condensed Statements of Operations and Comprehensive Loss For Q3 2023, total revenues increased to $34.0 million, and the net loss narrowed to $41.3 million, with similar trends observed for the nine-month period Three Months Ended September 30, (in thousands, except per share data) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Product sales, net | $20,251 | $13,964 | | Collaboration revenue | $13,718 | $5,016 | | Total Revenues | $33,969 | $18,980 | | Loss from operations | $(27,533) | $(41,623) | | Net loss | $(41,250) | $(55,117) | | Net loss per share | $(0.37) | $(0.81) | Nine Months Ended September 30, (in thousands, except per share data) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Product sales, net | $57,575 | $40,896 | | Collaboration revenue | $26,509 | $15,761 | | Total Revenues | $84,084 | $56,657 | | Loss from operations | $(113,196) | $(136,988) | | Net loss | $(152,904) | $(178,172) | | Net loss per share | $(1.53) | $(2.78) | Condensed Statements of Stockholders' Deficit The stockholders' deficit increased to $410.0 million by September 30, 2023, primarily due to a net loss, partially offset by capital raised from equity issuances - The total stockholders' deficit grew to $(410.0) million at September 30, 2023, from $(323.8) million at December 31, 2022[15] - Key activities impacting the deficit during the first nine months of 2023 included a net loss of $152.9 million, stock-based compensation of $9.0 million, and net proceeds from stock and warrant issuances of approximately $56.9 million[15] Condensed Statements of Cash Flows For the nine months ended September 30, 2023, net cash used in operating activities improved, resulting in a $9.9 million net decrease in cash and cash equivalents Cash Flow Summary for Nine Months Ended Sep 30, (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(98,431) | $(132,355) | | Net cash provided by investing activities | $42,500 | $19,898 | | Net cash provided by financing activities | $45,989 | $62,964 | | Net decrease in cash and cash equivalents | $(9,942) | $(49,493) | | Cash, cash equivalents at end of period | $114,833 | $209,399 | Notes to Condensed Financial Statements The notes detail accounting policies, the successful CLEAR Outcomes trial, sNDA submissions, a dispute with DSE over a $300 million milestone, and recent equity financing - The company completed its CLEAR Outcomes trial, which met its primary endpoint, showing significant cardiovascular risk reductions with bempedoic acid[20][21] - Supplemental New Drug Applications (sNDAs) were submitted to the FDA and a Type II(a) variation application was filed with the EMA to add cardiovascular risk reduction to product labels, with decisions expected in 2024[23][24] - The company is in a legal dispute with its European partner, DSE, regarding its right to receive a $300 million milestone payment related to the CLEAR Outcomes trial results[71][72] - In March 2023, the company raised approximately $52.4 million in net proceeds through a registered direct offering of common stock, pre-funded warrants, and warrants[22][127] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses increased revenues, a narrowed net loss due to higher revenue and lower R&D expenses, and a sufficient liquidity position to fund future operations Results of Operations For Q3 2023 and the nine-month period, revenue increased, R&D expenses decreased, and SG&A expenses rose, leading to a reduced net loss - Q3 2023 vs Q3 2022: - Product sales, net: Increased by $6.3 million due to prescription growth of NEXLETOL and NEXLIZET[168] - Collaboration revenue: Increased by $8.7 million due to higher product sales to partners and royalty growth[169] - R&D expenses: Decreased by $14.2 million primarily due to lower costs for the CLEAR Outcomes study[171] - SG&A expenses: Increased by $8.2 million due to higher legal and promotional costs[172] - Nine Months 2023 vs 2022: - Product sales, net: Increased by $16.7 million due to prescription growth[176] - Collaboration revenue: Increased by $10.7 million from higher partner sales and royalties[177] - R&D expenses: Decreased by $17.5 million due to lower CLEAR Outcomes study costs[179] - SG&A expenses: Increased by $12.2 million from higher legal, consulting, and promotional expenses[180] Liquidity and Capital Resources As of September 30, 2023, the company had $114.8 million in cash, supplemented by recent equity offerings, and expects sufficient liquidity for the foreseeable future - The company's primary source of liquidity as of September 30, 2023, was $114.8 million in cash and cash equivalents[184] - During the nine months ended September 30, 2023, the company raised approximately $4.4 million net from its 2023 ATM Program and approximately $52.4 million net from a registered direct offering and warrant amendments[183][193] - Management believes current cash and expected future revenues are sufficient to fund operations for the foreseeable future[183][197] Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the company's market risk disclosures since its 2022 Annual Report on Form 10-K - There have been no material changes with respect to market risk disclosures since the 2022 Annual Report on Form 10-K[200] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting - As of September 30, 2023, the company's disclosure controls and procedures were deemed effective by management[202] - 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[203] PART II — OTHER INFORMATION Legal Proceedings Information on legal proceedings, including the dispute with DSE over a $300 million milestone payment, is detailed in Note 5 of the financial statements - Information regarding legal proceedings is detailed in Note 5, "Commitments and Contingencies," of the financial statements[205] Risk Factors New or materially changed risk factors include stock price volatility, potential delisting, delays in FDA/SEC reviews, DSE's failure to perform, and banking system instability - The company's common stock has experienced substantial price volatility and could be delisted from Nasdaq if it fails to meet continuing listing standards, such as the minimum price requirement[209] - A dispute with partner DSE over a $300 million milestone payment is highlighted as a risk. A failure to receive or delay in receiving milestone payments from partners could significantly impact future capital needs[212] - Inadequate funding or shutdowns of government agencies like the FDA and SEC could hinder their ability to review and approve new products or applications in a timely manner[210][211] - Recent failures of banks and financial institutions pose a risk to the company's ability to access its cash, cash equivalents, and investments, which could adversely affect operations[217][218] Exhibits This section provides an index of all exhibits filed with the report, including corporate governance documents and required CEO/CFO certifications - The Exhibit Index lists all documents filed with the report, including corporate governance documents and required CEO/CFO certifications[220][222]