UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2019~~2020

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35986

Esperion Therapeutics, Inc.

(Exact name of registrant as specified in its charter)


Delaware		26-1870780
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3891 Ranchero Drive, Suite 150

Ann Arbor, MI 48108

(Address of principal executive office) (Zip Code)

Registrant’s telephone number, including area code:

(734) 887-3903

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	ESPR	NASDAQStock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ⌧☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧☒

As of August 1, ~~2019,~~2020, there were ~~27,170,680~~27,825,428 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

Table of Contents

Esperion Therapeutics, Inc.

INDEX


		Page

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Balance Sheets at June 30, ~~2019~~2020 and December 31, ~~2018~~2019		3
Condensed Statements of Operations and Comprehensive Income (Loss) for the three and six month periods ended June 30, ~~2019~~2020 and ~~2018~~2019		4
Condensed Statements of Stockholders’ Equity for the three and six month periods ended June 30, ~~2019~~2020 and ~~2018~~2019		5
Condensed Statements of Cash Flows for the three and six month periods ended June 30, ~~2019~~2020 and ~~2018~~2019		6
Notes to Condensed Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

Item 3. Quantitative and Qualitative Disclosures About Market Risk		3231

Item 4. Controls and Procedures		3332

PART II — OTHER INFORMATION

Item 1. Legal Proceedings		33

Item 1A. Risk Factors		3433

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3634

Item 6. Exhibits		3634

Signatures		3836

Table of Contents

Esperion Therapeutics, Inc.

Condensed Balance Sheets

(in thousands, except share data)


	June 30,		December 31,		June 30,		December 31,
	2019		2018		2020		2019
	(unaudited)				(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	274,344	$	36,973	$	298,489	$	166,130
Restricted cash		928		—		—		928
Short-term investments		26,882		99,050		2,247		34,651
Prepaid clinical development costs		3,977		5,275		890		6,081
Right of use operating lease assets		198		—
Inventories						8,248		—
Other prepaid and current assets		792		1,334		11,497		3,924
Total current assets		307,121		142,632		321,371		211,714

Property and equipment, net		903		520		1,512		1,145
Intangible assets		56		56
Long-term investments		—		243
Right of use operating lease assets		734		—		6,175		1,532
Other long-term assets						1,294		56
Total assets	$	308,814	$	143,451	$	330,352	$	214,447

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	28,404	$	44,893	$	29,690	$	28,856
Accrued clinical development costs		17,301		16,039		19,641		17,511
Other accrued liabilities		4,809		3,401		21,908		11,871
Revenue interest liability						9,276		5,236
Deferred revenue from collaborations		3,599		—		1,134		2,152
Operating lease liabilities		199		—		2,232		454
Total current liabilities		54,312		64,333		83,881		66,080

Revenue interest liability		124,409		—		157,015		127,308
Operating lease liabilities		759		—		3,967		1,109
Total liabilities		179,480		64,333		244,863		194,497
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized and no shares issued or outstanding as of June 30, 2019 and December 31, 2018		—		—
Common stock, $0.001 par value; 120,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 27,036,652 shares issued and outstanding at June 30, 2019 and 26,824,859 shares issued and outstanding at December 31, 2018		27		27
Preferred stock, $0.001 par value; 5,000,000 shares authorized and 0 shares issued or outstanding as of June 30, 2020 and December 31, 2019						—		—
Common stock, $0.001 par value; 120,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 27,751,655 shares issued and outstanding at June 30, 2020 and 27,497,911 shares issued and outstanding at December 31, 2019						28		27
Additional paid-in capital		694,266		677,511		734,365		715,166
Accumulated other comprehensive loss		(16)		(319)
Accumulated other comprehensive income						—		23
Accumulated deficit		(564,943)		(598,101)		(648,904)		(695,266)
Total stockholders’ equity		129,334		79,118		85,489		19,950
Total liabilities and stockholders’ equity	$	308,814	$	143,451	$	330,352	$	214,447

See accompanying notes to the condensed financial statements.

Table of Contents

Esperion Therapeutics, Inc.

Condensed Statements of Operations and Comprehensive Income ~~(Loss)~~(Loss)

(in thousands, except share and per share data)

(unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,


2019

2018

2019

2018
Revenues:

Collaboration Revenue

$
982

$
—

$
146,401

$
—
Total Revenues

982

—

146,401

—

Operating expenses:

Research and development

$
42,788

$
39,524

$
89,096

$
80,464
General and administrative

13,492

6,956

25,674

12,910
Total operating expenses

56,280

46,480

114,770

93,374
Income (loss) from operations

(55,298)

(46,480)

31,631

(93,374)

Other income, net

1,077

750

1,527

1,514
Net income (loss)

$
(54,221)

$
(45,730)

$
33,158

$
(91,860)
Net income (loss) per common share - basic

$
(2.01)

$
(1.71)

$
1.23

$
(3.44)
Net income (loss) per common share - diluted

$
(2.01)

$
(1.71)

$
1.16

$
(3.44)
Weighted-average shares outstanding - basic

26,968,818

26,786,796

26,906,149

26,696,495
Weighted-average shares outstanding - diluted

26,968,818

26,786,796

28,518,015

26,696,495

Other comprehensive income:

Unrealized gain on investments

$
95

$
187

$
303

$
69
Comprehensive income (loss)

$
(54,126)

$
(45,543)

$
33,461

$
(91,791)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Revenues:
Product sales, net	$	609	$	—	$	1,467	$	—
Collaboration revenue		211,627		982		212,609		146,401
Total Revenues		212,236		982		214,076		146,401

Operating expenses:
Cost of goods sold		398		—		429		—
Research and development		34,987		42,788		69,689		89,096
Selling, general and administrative		47,681		13,492		89,234		25,674
Total operating expenses		83,066		56,280		159,352		114,770

Income (loss) from operations		129,170		(55,298)		54,724		31,631

Interest expense		(4,640)		—		(8,811)		—
Other income, net		81		1,077		449		1,527
Net income (loss)	$	124,611	$	(54,221)	$	46,362	$	33,158

Net income (loss) per common share - basic	$	4.50	$	(2.01)	$	1.68	$	1.23
Net income (loss) per common share - diluted	$	4.32	$	(2.01)	$	1.60	$	1.16

Weighted-average shares outstanding - basic		27,665,728		26,968,818		27,592,479		26,906,149
Weighted-average shares outstanding - diluted		28,854,445		26,968,818		28,948,058		28,518,015

Other comprehensive income (loss):
Unrealized gain (loss) on investments	$	(9)	$	95	$	(23)	$	303
Comprehensive income (loss)	$	124,602	$	(54,126)	$	46,339	$	33,461

See accompanying notes to the condensed financial statements.

Table of Contents

Esperion Therapeutics, Inc.

Condensed Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

Accumulated

Additional

Other

Total

Common Stock

Paid-In

Accumulated

Comprehensive

Stockholders’


Shares

Amount

Capital

Deficit

Loss

Equity
Balance December 31, 2017

26,304,669

$
26

$
641,801

$
(396,291)

$
(845)

$
244,691
Exercise of stock options

285,413

1

9,775

—

—

9,776
Exercise of warrants

159,944

—

—

—

—

—
Vesting of restricted stock units

1,562

—

—

—

—

—
Stock-based compensation

—

—

5,921

—

—

5,921
Other comprehensive loss

—

—

—

—

(118)

(118)
Net loss

—

—

—

(46,130)

—

(46,130)
Balance March 31, 2018

26,751,588

$
27

$
657,497

$
(442,421)

$
(963)

$
214,140
Exercise of stock options

49,504

—

1,597

—

—

1,597
Vesting of restricted stock units

625

—

—

—

—

—
Stock-based compensation

—

—

5,723

—

—

5,723
Other comprehensive gain

—

—

—

—

187

187
Net loss

—

—

—

(45,730)

—

(45,730)
Balance June 30, 2018

26,801,717

$
27

$
664,817

$
(488,151)

$
(776)

$
175,917


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance December 31, 2018	26,824,859	$	27	$	677,511	$	(598,101)	$	(319)	$	79,118
Exercise of stock options	80,218		—		1,669		—		—		1,669
Vesting of restricted stock units	3,125		—		—		—		—		—
Stock-based compensation	—		—		6,636		—		—		6,636
Other comprehensive gain	—		—		—		—		208		208
Net income	—		—		—		87,379		—		87,379
Balance March 31, 2019	26,908,202	$	27	$	685,816	$	(510,722)	$	(111)	$	175,010
Exercise of stock options	115,612		—		1,887		—		—		1,887
Exercise of warrants	5,813		—		—		—		—		—
Vesting of restricted stock units	7,025		—		—		—		—		—
Stock-based compensation	—		—		6,563		—		—		6,563
Other comprehensive gain	—		—		—		—		95		95
Net loss	—		—		—		(54,221)		—		(54,221)
Balance June 30, 2019	27,036,652	$	27	$	694,266	$	(564,943)	$	(16)	$	129,334


								Accumulated											Accumulated
				Additional				Other		Total					Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’		Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity		Shares	Amount		Capital		Deficit		Income		Equity
Balance December 31, 2018	26,824,859	$	27	$	677,511	$	(598,101)	$	(319)	$	79,118
Balance December 31, 2019												27,497,911	$	27	$	715,166	$	(695,266)	$	23	$	19,950
Exercise of stock options	80,218		—		1,669		—		—		1,669	40,133		1		1,013		—		—		1,014
Vesting of restricted stock units	3,125		—		—		—		—		—	10,089		—		—		—		—		—
Stock-based compensation	—		—		6,636		—		—		6,636	—		—		7,053		—		—		7,053
Other comprehensive gain	—		—		—		—		208		208
Net income	—		—		—		87,379		—		87,379
Balance March 31, 2019	26,908,202	$	27	$	685,816	$	(510,722)	$	(111)	$	175,010
Other comprehensive loss												—		—		—		—		(14)		(14)
Net loss												—		—		—		(78,249)		—		(78,249)
Balance March 31, 2020												27,548,133	$	28	$	723,232	$	(773,515)	$	9	$	(50,246)
Exercise of stock options	115,612		—		1,887		—		—		1,887	160,024		—		3,738		—		—		3,738
Exercise of warrants	5,813		—		—		—		—		—
Vesting of restricted stock units	7,025		—		—		—		—		—	43,498		—		—		—		—		—
Stock-based compensation	—		—		6,563		—		—		6,563	—		—		7,395		—		—		7,395
Other comprehensive gain	—		—		—		—		95		95
Net loss	—		—		—		(54,221)		—		(54,221)
Balance June 30, 2019	27,036,652	$	27	$	694,266	$	(564,943)	$	(16)	$	129,334
Other comprehensive loss												—		—		—		—		(9)		(9)
Net income												—		—		—		124,611		—		124,611
Balance June 30, 2020												27,751,655	$	28	$	734,365	$	(648,904)	$	—	$	85,489

See accompanying notes to the condensed financial statements.

Table of Contents

Esperion Therapeutics, Inc.

Condensed Statements of Cash Flows

(in thousands)

(unaudited)

Six Months Ended June 30,

2019

2018
Operating activities

Net income (loss)

$
33,158

$
(91,860)
Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation expense

126

124
Accretion of premiums and discounts on investments

(121)

(57)
Stock-based compensation expense

13,199

11,644
Changes in assets and liabilities:

Prepaids and other assets

1,840

(4,985)
Deferred revenue

3,599

—
Accounts payable

(16,705)

2,107
Other accrued liabilities

2,586

608
Net cash provided by (used in) operating activities

37,682

(82,419)

Investing activities

Purchases of investments

—

(20,540)
Proceeds from sales/maturities of investments

72,835

82,393
Purchase of property and equipment

(423)

—
Net cash provided by investing activities

72,412

61,853

Financing activities

Proceeds from revenue interest liability, net of issuance costs

124,649

—
Proceeds from exercise of common stock options

3,556

11,374
Payments on long-term debt

—

(896)
Net cash provided by financing activities

128,205

10,478
Net increase (decrease) in cash and cash equivalents

238,299

(10,088)
Cash and cash equivalents at beginning of period

36,973

34,468
Cash, cash equivalents and restricted cash at end of period

$
275,272

$
24,380
Supplemental disclosure of cash flow information:

Issuance costs from revenue interest agreement not yet paid

$
240

$
—
Purchase of property and equipment not yet paid

285

—
Non cash right of use asset

26

—


	Six Months Ended June 30,
	2020		2019
Operating activities
Net income	$	46,362	$	33,158
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		224		126
Accretion of premiums and discounts on investments		(93)		(121)
Non-cash interest expense related to the revenue interest liability		8,811		—
Stock-based compensation expense		14,448		13,199
Changes in assets and liabilities:
Prepaids and other assets		(2,382)		1,840
Deferred revenue		(1,018)		3,599
Inventories		(8,248)		—
Other long-term assets		(1,238)		—
Accounts payable		921		(16,705)
Other accrued liabilities		12,257		2,586
Net cash provided by operating activities		70,044		37,682

Investing activities
Purchases of investments		(4,420)		—
Proceeds from sales/maturities of investments		36,895		72,835
Purchase of property and equipment		(776)		(423)
Net cash provided by investing activities		31,699		72,412

Financing activities
Proceeds from revenue interest liability		25,000		124,649
Proceeds from exercise of common stock options		4,752		3,556
Payments on revenue interest liability		(64)		—
Net cash provided by financing activities		29,688		128,205

Net increase in cash and cash equivalents		131,431		238,299
Cash, cash equivalents and restricted cash at beginning of period		167,058		36,973
Cash, cash equivalents and restricted cash at end of period	$	298,489	$	275,272
Supplemental disclosure of cash flow information:
Issuance costs from revenue interest agreement not yet paid	$	—	$	240
Purchase of property and equipment not yet paid		6		285
Non cash right of use asset		(7)		26

See accompanying notes to the condensed financial statements.

Table of Contents

Esperion Therapeutics, Inc.

Notes to the Condensed Financial Statements

(unaudited)

1. The Company and Basis of Presentation

~~The Company~~Esperion Therapeutics, Inc. ("the Company”) is the Lipid Management Company, a ~~late-stage~~ pharmaceutical company focused on developing and commercializing ~~complementary, cost-effective, convenient,~~affordable, oral, once-daily, ~~oral therapies~~non-statin medicines for the treatment of patients with elevated low density lipoprotein cholesterol ("LDL-C"). Through scientific and clinical excellence, and a deep understanding of cholesterol biology, the experienced Lipid Management Team at Esperion is committed to developing new LDL-C lowering ~~therapies~~medicines that will make a substantial impact on reducing global cardiovascular disease ("CVD"); the leading cause of death around the world. ~~Bempedoic~~NEXLETOL® (bempedoic acid) and NEXLIZET^TM (bempedoic acid and ezetimibe) tablets are the first, oral, once-daily, non-statin LDL-C lowering medicines approved in the U.S. in nearly 20 years for patients with atherosclerotic cardiovascular disease (“ASCVD”) or heterozygous familial hypercholesterolemia (“HeFH”).

On February 21, 2020, the Company announced that the U.S. Food and Drug Administration (“FDA”) approved NEXLETOL an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with HeFH or established ASCVD who require additional lowering of LDL-C. The effect of NEXLETOL on cardiovascular morbidity and mortality has not been determined. NEXLETOL is the first oral, once-daily, non-statin LDL-C lowering medicine approved since 2002 for indicated patients. NEXLETOL became commercially available on March 30, 2020.

On February 26, 2020, the Company announced that the FDA approved NEXLIZET as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with HeFH or established ASCVD who require additional lowering of LDL-C. The effect of NEXLIZET on cardiovascular morbidity and mortality has not been determined. NEXLIZET is the first non-statin, LDL-C lowering fixed combination drug product ever approved. NEXLIZET became commercially available on June 4, 2020.

On January 31, 2020, the Committee for Medicinal Products for Human Use ("CHMP") of the European Medicines Agency ("EMA") adopted a positive opinion for the Marketing Authorisation Applications ("MAAs") of both bempedoic acid and the bempedoic acid / ezetimibe combination tablet are targeted therapies that are being developed to significantly lower elevated LDL-C levels in patients with hypercholesterolemia, including patients inadequately treated with current lipid-modifying therapies.

~~On February 20, 2019, the Company submitted the new drug application (“NDA”) for bempedoic acid and on February 26, 2019, the Company submitted the NDA~~tablets, recommending approval for the ~~bempedoic acid / ezetimibe combination tablet to the Food~~treatment of hypercholesterolemia and ~~Drug Administration (“FDA”) for LDL-C lowering indications.~~mixed dyslipidemia. On ~~May 5, 2019,~~April 6, 2020, the Company announced that the ~~FDA accepted~~European Commission (“EC”) approved the ~~NDAs~~NILEMDO™ (bempedoic acid) and NUSTENDI™ (bempedoic acid and ezetimibe) tablets for the treatment of hypercholesterolemia and mixed dyslipidemia. The decision is applicable to all 27 European Union member states plus the United Kingdom, Iceland, Norway and Liechtenstein. NILEMDO (bempedoic acid) and NUSTENDI (bempedoic acid and ezetimibe) are the branded products names for bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet~~tablets in Europe. NILEMDO is the first, oral, non-statin, LDL-C lowering medicines approved in Europe in almost two decades for ~~filing~~indicated patients, and NUSTENDI is the first non-statin, LDL-C lowering combination medicine ever approved in Europe.

On April 17, 2020, the Company entered into a license and collaboration agreement (the "Otsuka Agreement") with Otsuka Pharmaceutical Co., Ltd. ("Otsuka"). Pursuant to the Otsuka Agreement, the Company granted Otsuka exclusive development and commercialization rights to NEXLETOL and NEXLIZET in Japan. Otsuka will be responsible for all development, regulatory, ~~review.~~and commercialization activities in Japan. In addition, Otsuka will fund all clinical development costs associated with the program in Japan. The ~~Prescription Drug User Fee Act (“PDUFA”) goal date for completion~~Company received an upfront cash payment of ~~the bempedoic acid NDA review is set for February 21,~~$60 million in April 2020 and ~~the PDUFA goal date for completion of the bempedoic acid / ezetimibe combination tablet NDA review is set for February 26, 2020. These dates are consistent with the Company’s expectations~~will receive up to an additional $450 million in total development and ~~reflect the standard review period.~~sales milestones. The ~~FDA has communicated that there is no current plan~~Company will also receive tiered royalties ranging from 15 percent to ~~hold an advisory committee meeting to discuss the applications.~~ 30 percent on net sales in Japan.

On ~~February 11, 2019,~~June 18, 2020, the Company ~~submitted the Marketing Authorization Applications (“MAAs”) for bempedoic acid and the bempedoic acid / ezetimibe combination tablet~~entered into an amendment to the ~~European Medicines Agency (“EMA”~~license and collaboration agreement ("LCA Amendment")~~. On February 28, 2019,~~ with Daiichi Sankyo Europe GmbH ("DSE") dated as of January 2, 2019. In June 2020, the ~~EMA~~Company completed ~~formal validation~~the transfer of the MAAs for ~~bempedoic acid~~NILEMDO and NUSTENDI. Pursuant to the ~~bempedoic acid / ezetimibe combination tablet~~terms of the amendment, DSE paid the Company the second $150 million milestone based on completion of the NUSTENDI MAA transfer rather than the first product sale in the EU. Prior to the execution of the LCA Amendment, the milestone payment was due upon the first commercial sale in Europe, which is anticipated later this year. Additionally, the Company and DSE have agreed to expand the territory in which DSE has exclusive commercialization rights to NILEMDO and NUSTENDI to include Turkey. DSE's designated affiliate in Turkey will be solely responsible, at its sole cost and expense, for ~~LDL-C lowering indications.~~all regulatory matters relating to such products in Turkey, including obtaining Regulatory Approval for such product in Turkey.

~~The Company is conducting a global cardiovascular outcomes trial ("CVOT")-known as~~ C~~holesterol~~ L~~owering via B~~E~~mpedoic Acid, an~~ A~~CL-inhibiting~~ Regimen (CLEAR) Outcomes, for bempedoic acid in 12,604 patients with hypercholesterolemia and high CVD risk and who can be considered statin averse. The Company initiated the CLEAR Outcomes CVOT in December 2016 and expects the study to be fully enrolled in the third quarter7

Table of ~~2019. The Company intends to use positive results from this CVOT to support submissions for a CV risk reduction indication in the U.S. and Europe by 2022.~~Contents

The Company's primary activities since incorporation have been conducting research and development activities, including nonclinical, preclinical and clinical testing, performing business and financial planning, recruiting personnel, and raising capital. ~~Accordingly,~~The Company received approval by the ~~Company has not~~FDA in February 2020 to commercialize NEXLETOL and NEXLIZET in the U.S., and accordingly commenced principal operations ~~and~~on March 30, 2020 with the commercialization of NEXLETOL. The Company is subject to risks and uncertainties which include the need to successfully commercialize its products, research, develop, and clinically test ~~potential~~ therapeutic products; obtain regulatory approvals for its ~~products and commercialize them, if approved;~~products; expand its management, commercial and scientific staff; and finance its operations with an ultimate goal of achieving profitable operations.

The Company has sustained annual operating losses since inception and expects such losses to continue over the foreseeable future. While management believes current cash resources and future cash received from the Company's net product sales, collaboration ~~agreement~~agreements with ~~Daiichi Sankyo Europe GmbH ("DSE"),~~DSE and Otsuka, entered into on January 2, 2019 and April 17, 2020, respectively, and from the Revenue Interest Purchase Agreement (“RIPA”) with Eiger III SA LLC (“Oberland”), an affiliate of Oberland Capital LLC, and the Purchasers named therein, entered into on June 26, 2019, will fund operations for the foreseeable future, management may continue to fund operations and advance the development of the Company's products and product candidates through a combination of collaborations with third parties, strategic alliances, licensing arrangements, permitted debt financings, permitted royalty-based financings, and permitted private and public ~~and~~ equity offerings or through other sources.

If adequate funds are not available, the Company may not be able to continue the development of its current products or future product candidates, or to commercialize its current or future product candidates, if approved.

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Basis of Presentation

The accompanying condensed interim financial statements are unaudited and were prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“GAAP”). In the opinion of management, the Company has made all adjustments, which include only normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods presented. Certain prior year amounts have been reclassified to conform with current year presentation. Certain information and disclosures normally included in the annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, have been condensed or omitted. These condensed interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, ~~2018,~~2019, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. The results of operations for the interim periods are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues, expenses and related disclosures. Actual results could differ from those estimates.

~~Cash and Cash Equivalents~~Concentration of Risk

The Company ~~invests its excess cash in bank deposits, money market accounts,~~enters into a limited number of distribution agreements with distributors and ~~short-term investments.~~specialty pharmacies. The ~~Company considers~~Company's net product sales are with these customers. As of June 30, 2020, 1 customer accounted for all ~~highly liquid investments with an original maturity~~ of ~~90 days or less at~~ the ~~time of purchase to be cash equivalents. Cash equivalents are reported at fair value.~~Company's net trade receivables.

~~Restricted Cash~~Inventories

~~Restricted cash consists~~Inventories are stated at the lower of ~~legally restricted amounts held by financial institutions pursuant~~cost or net realizable value and recognized on a first-in, first-out ("FIFO") method. The Company uses standard cost to ~~contractual arrangements.~~

~~Investments~~

~~Investments are considered~~determine the cost basis for inventory. Inventory is capitalized based on when future economic benefit is expected to be available-for-sale and are carried at fair value. Unrealized gains and losses, if any, are reported as a separate component of stockholders’ equity. The cost of investments classified as available-for-sale are adjusted for the amortization of premiums and accretion of discounts to maturity and recorded in other income, net. Realized gains and losses, if any, are determined using the specific identification method and recorded in other income, net. Investments with original maturities beyond 90 days at the date of purchase and which mature at, or less than twelve months from, the balance sheet date are classified as current. Investments with a maturity beyond twelve months from the balance sheet date are classified as long-term.

~~Concentration of Credit Risk~~

~~Cash, cash equivalents, and marketable securities consist of financial instruments that potentially subject the Company to concentrations of credit risk.~~realized. The Company ~~has established guidelines~~began capitalizing inventory upon receiving FDA approval for ~~investment~~NEXLETOL and NEXLIZET on February 21, 2020 and February 26, 2020, respectively. Prior to the FDA approval of ~~its excess cash~~NEXLETOL and ~~believes~~NEXLIZET, expenses associated with the ~~guidelines maintain safety~~manufacturing of the Company's products were recorded as research and ~~liquidity through diversification of counterparties and maturities.~~

~~Segment Information~~

The Company views its operations and manages its business in one operating segment, which is the business of researching, developing and commercializing therapies for the treatment of patients with elevated LDL-C.development expense.

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~~Fair Value of Financial Instruments~~

The Company’s cash, cash equivalents, restricted cash and investments are carried at fair value. Financial instruments, including other prepaid and current assets, accounts payable and accrued liabilities are carried at cost, which approximates fair value. Debt is carried at amortized cost, which approximates fair value.

~~Property and Equipment, Net~~

Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets, generally three to ten years. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful lives of the related assets.

~~Impairment of Long-Lived Assets~~

The Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset andanalyzes its ~~eventual disposition are less than its carrying amount. The impairment loss, if recognized, would be based~~inventory levels on ~~the excess of the carrying value of the impaired asset over its respective fair value. No impairment losses have been recorded through June 30, 2019.~~

~~Leases~~

~~The Company reviews all arrangements~~a periodic basis to determine if ~~the contract contains~~any inventory is at risk for expiration prior to sale or has a ~~lease or an embedded lease using the criteria in Accounting Standards Codification (“ASC”) 842. If a lease~~cost basis that is ~~identified, the Company reviews the consideration~~greater than its estimated future net realizable value. Any adjustments are recognized through cost of sales in the contract and separates the lease components from the nonlease components. In addition, the Company reviews the classification of the lease between operating and finance leases. According to ASC 842, lessees should discount lease payments at the lease commencement date using the rate implicitperiod in the lease. If the rate implicit in the lease is not readily determinable, a lessee must use its incremental borrowing rate for purposes of classifying the lease and measuring the right-of-use asset and liability. To the extent the rate is not implicit in the lease, the Company uses the incremental borrowing rate it would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

~~Revenue Interest Liability~~

The revenue interest liability is presented net of deferred financing costs on the condensed balance sheets. The Company imputes non-cash interest expense associated with this liability using the effective interest rate method. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate on the liability may vary during the term of the agreement depending on a number of factors, including the level of forecasted sales. The Company evaluates the interest rate quarterly based on its current sales forecasts utilizing the prospective method.which they are incurred.

Revenue Recognition

In accordance with ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: identify the contracts with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when or as the entity satisfies a performance obligation. At contract inception the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. The Company derives revenue through two primary sources: collaboration revenue and product sales. Collaboration revenue consists of the collaboration payments to the Company for collaboration arrangements outside of the United States for the development, manufacturing and commercialization of the Company's product candidates by the Company's partners and product sales consists of sales of NEXLETOL and NEXLIZET.

a.	Collaboration Revenue

The Company has entered into an agreement related to its activities to develop, manufacture, and commercialize its product candidates. The Company earns collaboration revenue in connection with a collaboration agreement to develop and/or commercialize product candidates where the Company deems the collaborator to be the customer. The Company has adopted ASC 606, Revenue from Contracts with Customers, and under the terms of the standard, revenue is measured as the amount of consideration expected to be entitled to in exchange for transferring promised goods or providing services to a customer. Revenue is recognized when (or as) the Company satisfies performance obligations under the terms of a contract. Depending on the terms of the arrangement, the Company may defer the recognition of all or a portion of the consideration received as the performance obligations are satisfied.

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The collaboration ~~agreement~~agreements may require the Company to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate. In ~~the~~an agreement involving multiple goods or services promised to be transferred to a customer, the Company must assess, at the inception of the contract, whether each promise represents a separate performance obligation (i.e., is "distinct"), or whether such promises should be combined as a single performance obligation.

The terms of the agreement typically include consideration to be provided to the Company in the form of non-refundable up-front payments, development milestones, sales milestones, and royalties on sales of products within a respective territory. The Company recognizes regulatory and approval milestones consideration when it is probable that a future reversal is unlikely to occur. For sales based milestones and royalties based on sales of product in a territory, the Company applies the sales-based royalty exception in ASC 606-10-55-65 to all of these milestones and royalties.

At the inception of the contract, the transaction price reflects the amount of consideration the Company expects to be entitled to in exchange for transferring promised goods or services to its customer. In the arrangement where the Company satisfies performance obligation(s) during the regulatory phase over time, the Company recognizes collaboration revenue typically using an input method on the basis of regulatory costs incurred relative to the total expected cost which determines the extent of progress toward completion. The Company reviews the estimate of the transaction price and the total expected cost each period and makes revisions to such estimates as necessary. Under contracted supply agreements with collaborators, the Company may manufacture and supply quantities of active pharmaceutical ingredient (“API”) or bulk tablets reasonably required by collaboration partners for the development or sale of licensed products in their respective territory. The Company recognizes revenue when the collaboration partner has obtained control of the API or bulk tablets. The Company records the costs related to the supply agreement in cost of goods sold on the condensed statements of operations and comprehensive income (loss).

Under the Company's collaboration ~~agreement,~~agreements, product sales and cost of sales may be recorded by the Company's collaborators as they are deemed to be the principal in the transaction. The Company receives royalties from the commercialization of such products, and records its share of the variable consideration, representing a percentage of net product sales, as collaboration revenue in the period in which such underlying sales occur and costs are incurred by the collaborator. The collaborator will provide the Company with estimates of its royalties for such quarter; these estimates are reconciled to actual results in the subsequent quarter, and the royalty is adjusted accordingly, as necessary.

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~~Please refer to the discussion in Note 3 “Collaborations with Third Parties” for further discussion of the accounting related to the collaboration agreement.~~

~~Research and Development~~Product Sales, Net

Research and development expenses consist of costs incurred to further the Company's research and development activities and include salaries and related benefits, costs associated with clinical activities, nonclinical activities, regulatory activities, manufacturing activities to support clinical activities and commercial product manufacturing supply asOn February 21, 2020, the Company ~~approaches anticipated approval, research-related overhead expenses~~announced that the FDA approved NEXLETOL as an adjunct to diet and ~~fees paid to external service providers that conduct certain research and development, clinical, and manufacturing activities on behalf~~maximally tolerated statin therapy for the treatment of ~~the Company. Research and development costs are expensed as incurred.~~

~~Accrued Clinical Development Costs~~

~~Outside research costs are a component~~adults with HeFH or established ASCVD who require additional lowering of research and development expense. These expenses include fees paid to clinical research organizations and other service providers that conduct certain clinical and product development activities on behalf of the Company. Depending upon the timing of payments to the service providers,LDL-C. On February 26, 2020, the Company ~~recognizes prepaid expenses~~announced that the FDA approved NEXLIZET as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with HeFH or ~~accrued expenses related to these costs. These accrued or prepaid expenses are based~~established ASCVD who require additional lowering of LDL-C. On March 30, 2020, NEXLETOL was commercially available in the U.S. through prescription and on ~~management's estimates of~~June 4, 2020, NEXLIZET was commercially available in the ~~work performed under service agreements, milestones achieved~~U.S. through prescription. Net product sales totaled $0.6 million and ~~experience with similar contracts. The Company monitors each of these factors~~$1.5 million for the three and ~~adjusts estimates accordingly.~~

~~Income Taxes~~six months ended June 30, 2020, respectively.

The Company ~~utilizes~~sells NEXLETOL and NEXLIZET to wholesalers in the ~~liability method~~U.S and, in accordance with ASC 606, recognizes revenue at the point in time when the customer is deemed to have obtained control of ~~accounting~~the product. The customer is deemed to have obtained control of the product at the time of physical receipt of the product at the customers’ distribution facilities, or free on board (“FOB”) destination, the terms of which are designated in the contract.

Product sales are recorded at the net selling price, which includes estimates of variable consideration for ~~income taxes~~which reserves are established for (a) rebates and chargebacks, (b) co-pay assistance programs, (c) distribution fees, (d) product returns, and (e) other discounts. Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as ~~required by ASC 740, Income Taxes. Under this method, deferred tax assets~~current contractual and ~~liabilities are determined~~statutory requirements, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on ~~differences between financial reporting~~the terms of the applicable contract. The amount of variable consideration may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Given the early stage of the Company’s commercial operations it has provided constraint of its variable consideration due to its potential consumption trends. Actual amounts of consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known.

Liabilities for co-pay assistance, expected product returns, rebates, and distributor fees are classified as “Other accrued liabilities” in the condensed balance sheets. Discounts, such as prompt pay discounts, and chargebacks are recorded as a reduction to trade accounts receivable, which is included in “Other prepaid and current assets” in the condensed balance sheets.

Forms of Variable Consideration

Rebates and Chargebacks: The Company estimates reductions to product sales for Public Health Service Institutions, such as Medicaid, Medicare and Veterans' Administration ("VA") programs, as well as certain other qualifying federal and state government programs, and other group purchasing organizations. The Company estimates these reductions based upon the Company's contracts with government agencies and other organizations, statutorily defined discounts and estimated payor mix. These organizations purchase directly from the Company's wholesalers at a discount and the ~~tax basis~~wholesalers charge the Company back the difference between the wholesaler price and the discounted price. The Company's liability for Medicaid rebates consists of ~~assets~~estimates for claims that a state will make for a current quarter. The Company's reserve for this discounted pricing is based on expected sales to qualified healthcare providers and ~~liabilities and are measured using enacted tax rates and laws~~the chargebacks that customers have already claimed.

Co-pay assistance: Eligible patients who have commercial insurance may receive assistance from the Company to reduce the patient's out of pocket costs. The Company will ~~be in effect~~buy down the difference between the amount of the eligible patient's co-pay when the ~~differences~~drug is purchased at the pharmacy at a determined price. Liabilities for co-pay assistance are ~~expected to reverse.~~calculated by actual program participation from third-party administrators.

Distribution Fees: The Company has ~~incurred annual operating losses since inception. Accordingly, it~~written contracts with its customers that include terms for distribution fees and costs for inventory management. The Company estimates and records distribution fees due to its customers based on gross sales.

Product Returns: The Company generally offers a right of return based on the product’s expiration date and certain spoilage and damaged instances. The Company estimates the amount of product sales that may be returned and records the estimate as a reduction of product sales in the period the related product sales is ~~not more likely than not that~~recognized. The Company’s estimates for expected returns are based primarily on an ongoing analysis of sales information and visibility into the ~~Company will realize a tax benefit from its deferred tax assets and as such, it has recorded a full valuation allowance.~~inventory remaining in the distribution channel.

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~~Stock-Based Compensation~~

Discounts:The Company ~~accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation-Stock Compensation. Accordingly, compensation costs related~~provides product discounts, such as prompt pay discounts, to ~~equity instruments granted are recognized over the requisite service periods of the awards on a straight-line basis at the grant-date fair value calculated using a Black-Scholes option-pricing model.~~its customers. The Company ~~accounts for forfeitures as they occur. Expense is recognized during~~estimates cash discounts based on terms in negotiated contracts and the ~~period the related services are rendered.~~Company’s expectations regarding future payment patterns.

~~Recent~~Recently Implemented Accounting Pronouncements

In ~~November 2018,~~June 2016, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting ~~Standard~~Standards Update (“ASU”) ~~2018-08,~~2016-13 which ~~clarifies that certain transactions between collaborative arrangement participants should~~requires financial instruments to be ~~accounted~~recognized at an estimate of current expected credit losses. As part of the ASU, financial assets measured at amortized cost will be presented at the net amount expected to be collected. In addition, companies will recognize an allowance for ~~as revenue under ASC 606 when~~credit losses on available-for-sale investments rather than reducing the ~~collaborative arrangement participant is a customer~~amortized cost in the context of a unit of account. The standard is effective for public companies for fiscal years beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted, included in any interim period, provided an ~~entity has already adopted ASC 606 or does so concurrently with the adoption of this guidance.~~other-than-temporary impairment. The Company ~~early adopted this guidance as of January 1, 2019, and implemented~~has chosen the ~~new guidance in its consideration of~~practical expedient to exclude accrued interest from both the ~~accounting for the DSE collaboration signed on January 2, 2019. Refer to Note 3 “Collaborations with Third Parties”~~fair value and the ~~Collaboration Revenue accounting policy above for further information.~~

~~In February 2016, the FASB issued ASU 2016-02, which was amended by subsequent updates (collectively the “lease standard” or “ASC 842”),~~amortized cost basis of available-for-sale debt securities in identifying and is intended to improve financial reporting about leasing transactions. The updated guidance requires a lessee to recognize assets and liabilities for leases with lease terms of more than twelve months.measuring an impairment. The Company adopted the standard on January 1, ~~2019 using~~2020. The adoption of this standard did not have a material impact on the ~~modified retrospective method. Results~~Company's balance sheets, statements of operations or statements of cash flows.

In August 2018, the FASB issued ASU 2018-15 which includes provisions to clarify customer's accounting for implementation costs incurred in a cloud computing arrangement. Under the ~~reporting period beginning after December 31, 2018 have been presented~~updated guidance, a customer in ~~accordance with~~a cloud computing arrangement that is a service contract should follow the internal-use software guidance to determine how to account for costs incurred in implementation. The updated guidance also requires certain classification on the balance sheets, statements of operations and statements of cash flows as well as additional quantitative and qualitative disclosures. The Company adopted the standard ~~while results~~effective January 1, 2020 and has chosen to adopt the standard prospectively. Implementation costs for ~~prior periods have not been adjusted. The Company recognized $1.0 million~~cloud computing arrangements are capitalized in "Other prepaid and ~~$1.0 million of operating lease assets and operating lease liabilities, respectively,~~current assets" on the ~~Company’s~~Company's balance sheets. The adoption of this standard did not have a material impact to the Company's balance sheets, asstatements of ~~January 1, 2019, primarily related to the lease agreement for the Company’s principal executive office. Refer to Note 9 “Leases” for more information on the Company’s leases.~~operations or statements of cash flows.

There have been no other 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, ~~2018.~~

2019.

3. Collaborations with Third Parties

DSE Agreement Terms

On January 2, 2019, the Company entered into a license and collaboration agreement with DSE. Pursuant to the agreement, the Company granted DSE exclusive commercialization rights to bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet~~tablets in the European Economic Area and Switzerland (“DSE Territory”). DSE will be responsible for commercialization in the DSE Territory. The Company remains responsible for clinical development, regulatory and manufacturing activities for the licensed products globally, including in the DSE Territory.

Pursuant to the agreement, the consideration consists of a $150.0 million upfront cash payment as well as $150.0 million cash payment to the Company upon first commercial sales in the DSE Territory. The Company also is responsible to supply DSE with certain manufacturing supply of the API or bulk tablets. The Company is also eligible to receive a substantial additional regulatory milestone payment upon the grant of the marketing ~~authorization~~authorisation in the European Union for the CV risk reduction label, depending on the range of relative risk reduction in the CLEAR Outcomes study. In addition, the Company is eligible to receive additional sales milestone payments related to total net sales achievements for DSE in the DSE Territory. Finally, the Company will receive tiered fifteen percent ~~(15%~~(15%) to twenty-five percent (25%) royalties on net DSE Territory sales.

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The agreement calls for both parties to participate in a Joint Collaboration Committee (the ~~“JCC”~~“DSE JCC”). The DSE JCC is comprised of executive management from each company and the Company will lead in all aspects related to development and DSE will lead in all aspects related to commercialization in the DSE Territory.

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Agreement Terms Amendment

On June 18, 2020, the Company entered into an amendment to the license and collaboration agreement with DSE, dated as of January 2, 2019. In June, the Company completed the transfer of the MAAs for NILEMDO and NUSTENDI. Pursuant to the terms of the amendment, DSE paid the Company the second $150.0 million milestone based on completion of the NUSTENDI MAA transfer rather than the first product sale in the EU, as previously agreed. Additionally, the Company and DSE have agreed to expand the DSE Territory, or the territory in which DSE has exclusive commercialization rights to NILEMDO and NUSTENDI to include Turkey. DSE's designated affiliate in Turkey will be solely responsible, at its sole cost and expense, for all regulatory matters relating to such products in Turkey, including obtaining regulatory approval for such products in Turkey.

Collaboration Revenue

The Company considered the guidance under ASC 606 and concluded that the agreement was in the scope of ASC 606. The Company concluded that the upfront payment of $150.0 million should be included in the transaction price and related to the following performance obligations under the agreement: 1) the license to the Company’s intellectual property and 2) the obligation to provide ongoing regulatory and development activities. The Company used the adjusted market assessment approach in determining the standalone selling price of the Company’s intellectual property and the expected cost plus margin approach in determining the standalone selling price of the Company’s obligation to provide ongoing regulatory and development activities. ~~Accordingly, for~~In the three and six months ended June 30, 2019, the Company recognized $1.0 million and $146.4 million of collaboration revenue, respectively. In the three and six months ended June 30, 2020, the Company recognized approximately $0.7 million and $1.6 million, respectively, related to the $150.0 million upfront payment, respectively. The $146.4 million relates to the performance obligations for the license to the Company’s intellectual property and a portion of ongoing regulatory and development activities conducted during the period ended June 30, 2019, in the amounts of $144.4 million and $2.0 ~~million, respectively. The remaining~~ ~~$3.6 million of the upfront payment was deferred as of June 30, 2019 due to an~~ on-going performance obligation ~~related to~~for the ongoing regulatory efforts related to the MAA in the DSE ~~Territory. This deferred~~Territory, which was transferred to DSE in June 2020.

In addition, in the three and six months ended June 30, 2020, the Company recognized the $150.0 million milestone as collaboration revenue based on the successful transfer of the NUSTENDI MAA. In the three and six months ended June 30, 2020, the Company recognized collaboration revenue of $1.0 million related to the sales of bulk tablets of NILEMDO and NUSTENDI to DSE pursuant to the Supply Agreement that was executed with DSE.

All remaining future potential milestone amounts were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606 due to the fact that such amounts hinge on development activities, regulatory approvals and sales-based milestones. Additionally, the Company expects that any consideration related to royalties and sales-based milestones will be recognized ~~ratably over~~when the ~~period leading~~subsequent sales occur.

Otsuka Agreement Terms

On April 17, 2020, the Company entered into the Otsuka Agreement with Otsuka. Pursuant to the Otsuka Agreement, the Company granted Otsuka exclusive development and commercialization rights to NEXLETOL and NEXLIZET in Japan. Otsuka will be responsible for all development, regulatory, and commercialization activities in Japan. In addition, Otsuka will fund all clinical development costs associated with the program in Japan.

Pursuant to the agreement, the consideration consists of a $60.0 million upfront cash payment and the Company will be eligible to receive additional payments of up to $450.0 million if certain regulatory and commercial milestones are achieved by Otsuka. The potential future milestone payments include up to $20.0 million upon first JNDA submissions in the ~~approval~~Otsuka Territory, up to $70.0 million upon the first NHI Price Listing for NEXLETOL in the Otsuka Territory, and up to $50.0 million upon the achievement of the ~~MAA acceptance by~~primary major adverse cardiovascular events (“MACE”) in the ~~EMA.~~CLEAR Outcomes study and the CV risk reduction rate on the U.S. label, depending on the range of relative risk reduction in the CLEAR Outcomes study. In addition, the Company is eligible to receive additional sales milestone payments up to $310.0 million related to total net sales achievements for Otsuka in Japan. Finally, the Company will receive tiered fifteen percent (15%) to thirty percent (30%) royalties on net sales in Japan.

The agreement calls for both parties to participate in a Joint Collaboration Committee (the "Otsuka JCC"). The Otsuka JCC is comprised of executive management from each company and Otsuka will lead in all aspects related to development and commercialization in the Otsuka Territory.

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Collaboration Revenue

The Company considered the guidance under ASC 606 and concluded that the agreement was in the scope of ASC 606. The Company concluded that the upfront payment of $60.0 million should be included in the transaction price and related to the performance obligation under the agreement to the license to the Company's intellectual property. In the three and six months ended June 30, 2020, the Company recognized $60.0 million of collaboration revenue related to the $60.0 million upfront payment.

All future potential milestone amounts were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606 due to the fact that such amounts hinge on development activities, regulatory ~~approval.~~approvals and sales-based milestones. Additionally, the Company expects that any consideration related to royalties and sales-based milestones will be recognized when the subsequent sales occur.

The Company has not yet recognized any revenue for milestone payments as the related regulatory and commercial milestones have not yet been achieved.

4. ~~Warrants~~Inventories

In connection with the Credit Facility entered into in June 2014, the Company issued a warrant to purchase 8,230 shares of common stock at an exercise price of $15.19. The warrant was recorded at fair value of $0.1 million to additional paid-in-capital in accordance with ASC 815-10 based upon the allocation of the debt proceeds. During the six months ended June 30, 2019, 8,230 warrants were net exercised for 5,813 shares of the Company’s common stock. AsInventories as of June 30, 2020 and December 31, 2019 consist of the following (in thousands):


	June 30, 2020		December 31, 2019
Raw materials	$	4,961	$	—
Work in process		2,869		—
Finished goods		418		—
	$	8,248	$	—

The Company has entered into a contract manufacturing agreement with a third party commercial manufacturing organization for the production of certain inventory supplies of NEXLETOL and NEXLIZET. The agreement has an initial term of three years and will renew automatically for successive periods of one year each unless terminated by either party. Under the agreement the Company ~~has no warrants outstanding.~~

is obligated to purchase minimum order commitments on a rolling twelve-month period for the batches of inventory supplies produced.

5. Commitments and Contingencies

On January 12, 2016, a purported stockholder of the Company filed a putative class action lawsuit in the United States District Court for the Eastern District of Michigan, against the Company and Tim Mayleben, captioned Kevin L. Dougherty v. Esperion Therapeutics, Inc., et al.~~(No.~~ (No. 16-cv-10089). The lawsuit alleges that the Company and Mr. Mayleben violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by allegedly failing to disclose in an August 17, 2015, public statement that the FDA would require a cardiovascular outcomes trial before approving the Company’s lead product candidate. The lawsuit seeks, among other things, compensatory damages in connection with an allegedly inflated stock price between August 18, 2015, and September 28, 2015, as well as ~~attorneys'~~attorneys’ fees and costs. On May 20, 2016, an amended complaint was filed in the lawsuit and on July 5, 2016, the Company filed a motion to dismiss the amended complaint. On December 27, 2016, the court granted the Company’s motion to dismiss with prejudice and entered judgment in the Company’s favor. On January 24, 2017, the plaintiffs in this lawsuit filed a motion to alter or amend the judgment. In May 2017, the court denied the plaintiff’s motion to alter or amend the judgment. On June 19, 2017, the plaintiffs filed a notice of appeal to the Sixth Circuit Court of Appeals and on September 14, 2017, they filed their opening brief in support of the appeal. The appeal was fully briefed on December 7, 2017, and it was argued before the Sixth Circuit on March 15, 2018. On September 27, 2018, the Sixth Circuit issued an opinion in which it reversed the district ~~court's~~court’s dismissal and remanded for further proceedings. On

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October 11, 2018, the Company filed a petition for rehearing en banc and, on October 23, 2018, the Sixth Circuit Court of Appeals directed plaintiffs to respond to that petition. On December 3, 2018, the Sixth Circuit denied the ~~Company's~~Company’s petition for en banc rehearing, and on December 11, 2018, the case was returned to the federal district court by mandate from the Sixth Circuit. On December 26, 2018, the Company filed an answer to the amended complaint, and on March 28, 2019, the Company filed its amended answer to the amended complaint. The Company is unable to predict the outcome of this matter and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome.

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On December 15, 2016, a purported stockholder of the Company filed a derivative lawsuit in the Court of Chancery of the State of Delaware against Tim Mayleben, Roger Newton, Mary McGowan, Nicole Vitullo, Dov Goldstein, Daniel Janney, Antonio Gotto Jr., Mark McGovern, Gilbert Omenn, Scott Braunstein, and Patrick Enright. The Company is named as a nominal defendant. The lawsuit alleges that the defendants breached their fiduciary duties to the Company when they made or approved improper statements on August 17, 2015, regarding the Company’s lead product candidate’s path to FDA approval, and failed to ensure that reliable systems of internal controls were in place at the Company. On February 8, 2019, the Company and defendants filed a motion to dismiss the derivative lawsuit. On April 23, 2019, the plaintiff filed an opposition to the motion to dismiss the derivative lawsuit, and the Company filed a reply brief on May 15, 2019. On November 6, 2019, the court held a hearing on the motion to dismiss. On February 13, 2020, the court granted the motion to dismiss with prejudice and entered judgment in the Company’s favor. On March 16, 2020, the plaintiff filed a notice of appeal to the Supreme Court of Delaware. On June 1, 2020, the plaintiff filed his opening brief on appeal to the Supreme Court of Delaware. On July 1, 2020, the Company and the defendants filed an answering brief. The lawsuit seeks, among other things, any damages sustained by the Company as a result of the defendants’ alleged breaches of fiduciary duties, including damages related to the above-referenced securities class action, an order directing the Company to take all necessary actions to reform and improve its corporate governance and internal procedures, restitution from the defendants, and attorneys’ fees and costs. The Company is unable to predict the outcome of this matter and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome.

~~On May 7, 2018, a purported stockholder of the Company filed a putative class action lawsuit in the United States District Court for the Eastern District of Michigan, captioned~~ ~~Kevin Bailey v. Esperion Therapeutics, Inc., et al. (No. 18-cv-11438~~). An amended complaint was filed on October 22, 2018, against the Company and certain directors and officers. The amended complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 based on allegedly making false and misleading statements and omissions about the safety and tolerability of bempedoic acid, and specifically facts and circumstances surrounding the Phase 3 trial results for bempedoic acid that the Company announced on May 2, 2018. On November 13, 2018, the Company filed a motion to dismiss the amended complaint, and that motion was fully briefed on December 18, 2018. The lawsuit sought, among other things, compensatory damages in connection with an allegedly inflated stock price between February 22, 2017, and May 22, 2018, as well as attorneys’ fees and costs. On February 19, 2019, the court granted the Company’s motion to dismiss with prejudice and entered judgment in the Company’s favor.

There have been no other material changes to the Company’s contractual obligations and commitments and contingencies outside the ordinary course of business from those previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019 other than the Revenue Interest Purchase Agreement disclosed in Note 8 “Liability Related to the Revenue Interest Purchase Agreement.”

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6. Investments

The following table summarizes the Company’s cash equivalents and short-term investments:


	June 30, 2019								June 30, 2020
			Gross		Gross		Estimated				Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value

	(in thousands)								(in thousands)
Cash equivalents:
Money market funds	$	218,783	$	—	$	—	$	218,783	$	287,632	$	—	$	—	$	287,632
U.S. treasury notes		26,567		—		—		26,567
Short-term investments:
Certificates of deposit		734		—		—		734
U.S. treasury notes		12,979		8		(11)		12,976
U.S. government agency securities		13,185		—		(13)		13,172
Commercial paper										2,247		—		—		2,247
Total	$	272,248	$	8	$	(24)	$	272,232	$	289,879	$	—	$	—	$	289,879


	December 31, 2018								December 31, 2019
			Gross		Gross		Estimated				Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value

	(in thousands)								(in thousands)
Cash equivalents:
Money market funds	$	34,526	$	—	$	—	$	34,526	$	20,970	$	—	$	—	$	20,970
U.S. treasury notes										2,497		—		—		2,497
Commercial paper										4,494		—		—		4,494
Short-term investments:
Certificates of deposit		3,873		—		(7)		3,866		245		—		—		245
U.S treasury notes		44,897		—		(142)		44,755		29,155		23		—		29,178
U.S. government agency securities		50,598		—		(169)		50,429
Long-term investments:
Certificates of deposit		244		—		(1)		243
Commercial paper										5,228		—		—		5,228
Total	$	134,138	$	—	$	(319)	$	133,819	$	62,589	$	23	$	—	$	62,612

At June 30, ~~2019,~~2020, remaining contractual maturities of investments classified as current on the balance sheets were less than 12 ~~months and at December 31, 2018, remaining contractual maturities of investments classified as long-term were less than two years.~~months.

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During the three and six months ended June 30, 2020, other income, net in the statements of operations includes interest income on investments of $0.1 million and $0.5 million, respectively, and income for the accretion of premiums and discounts on investments of less than $0.1 million and $0.1 million, respectively. During the three and six months ended June 30, 2019, other income, net in the statements of operations includes interest income on investments of $1.0 million and $1.4 million, respectively, and income for the accretion of premiums and discounts on investments of less than $0.1 million and $0.1 million, respectively. During the three and six months ended June 30, 2018, other income, net in the statements of operations includes interest income on investments of $0.7 million and $1.5 million, and income for the accretion of premiums and discounts on investments of $0.1 million and $0.1 million, respectively.

There were no0 unrealized gains or losses on investments reclassified from accumulated other comprehensive ~~loss~~income (loss) to other income in the statements of operations during the three and six months ended June 30, ~~2019~~2020 and ~~2018.~~2019.

In the three and six months ended June 30, 2020, there were 0 allowances for credit losses and all unrealized gains (losses) for available-for-sale securities were recognized in accumulated other comprehensive income. As of June 30, 2020, the Company had 0 accrued interest receivables.

~~7. Fair Value Measurements~~

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7. Fair Value Measurements

The Company follows accounting guidance that emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements are defined on a three level hierarchy:


Level 1 inputs:		Quoted prices for identical assets or liabilities in active markets;

Level 2 inputs:		Observable inputs other than Level 1 prices, such as quoted market prices for similar assets or liabilities or other inputs that are observable or can be corroborated by market data; and

Level 3 inputs:		Unobservable inputs that are supported by little or no market activity and require the reporting entity to develop assumptions that market participants would use when pricing the asset or liability.

The following table presents the Company’s financial assets ~~and liabilities~~ that have been measured at fair value on a recurring basis:

Description

Total

Level 1

Level 2

Level 3

(in thousands)
June 30, 2019

Assets:

Money market funds

$
218,783

$
218,783

$
—

$
—
Investments:

Certificates of deposit

734

734

—

—
U.S. treasury notes

39,543

39,543

—

—
U.S. government agency securities

13,172

—

13,172

—
Total assets at fair value

$
272,232

$
259,060

$
13,172

$
—
December 31, 2018

Assets:

Money market funds

$
34,526

$
34,526

$
—

$
—
Available-for-sale securities:

Certificates of deposit

4,109

4,109

—

—
U.S. treasury notes

44,755

44,755

—

—
U.S. government agency securities

50,429

—

50,429

—
Total assets at fair value

$
133,819

$
83,390

$
50,429

$
—

At June 30, 2019, the fair value of the $125.0 million liability related to the sale of future revenues is based on the Company’s current estimates of future revenues expected to be paid to Eiger III SA LLC (“Oberland”), an affiliate of Oberland Capital LLC, over the life of the Revenue Interest Purchase Agreement (“RIPA”). The liability is considered a Level 3 input based on the three level hierarchy. Refer to Note 8 for further information.


Description	Total		Level 1		Level 2		Level 3

	(in thousands)
June 30, 2020
Assets:
Money market funds	$	287,632	$	287,632	$	—	$	—
Investments:
Commercial paper		2,247		—		2,247		—
Total assets at fair value	$	289,879	$	287,632	$	2,247	$	—
December 31, 2019
Assets:
Money market funds	$	20,970	$	20,970	$	—	$	—
Investments:
Certificates of deposit		245		245		—		—
U.S. treasury notes		31,675		31,675		—		—
Commercial paper		9,722		—		9,722		—
Total assets at fair value	$	62,612	$	52,890	$	9,722	$	—

There were no transfers between Levels 1, 2 or 3 during the three and six months ended June 30, ~~2019~~2020 and ~~2018.~~2019.

8. Liability Related to the Revenue Interest Purchase Agreement

On June 26, 2019, the Company entered into a ~~Revenue Interest Purchase Agreement (“RIPA”)~~RIPA with Oberland, as agent for purchasers party thereto (the “Purchasers”), and the Purchasers named therein, to obtain financing in respect to the commercialization and further development of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet~~tablets and other working capital needs. Pursuant to the RIPA, the Company received $125.0 million at closing, less certain ~~transaction expenses.~~issuance costs. The Company ~~will~~is also be entitled to receive up to approximately $75.0 million in

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subsequent installments subject to the terms and conditions set forth in the RIPA: (i) $25.0 million upon certain regulatory approval of its product candidates and (ii) $50.0 million, at the Company’s option, upon reaching $100.0 million trailing worldwide six-month net sales any time prior to December 31, 2021 (the “Third Payment”). In March 2020, the Company received $25.0 million from Oberland upon receiving regulatory approval of NEXLETOL.

As consideration for such payments, the Purchasers ~~will~~ have a right to receive certain revenue interests (the “Revenue Interests”) from the Company based upon net sales of the Company’s certain products ~~once approved,~~ which

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will be tiered payments initially ranging from 2.5% to 7.5% of the Company’s net sales in the covered territory (the “Covered Territory”); provided that (a) if annual net sales equal or exceed $350.0 million by December 31, 2021 (the “Sales Threshold”), the initially tiered revenue interest rate will be decreased to a single rate of 2.5% of the Company’s net sales in the Covered Territory, beginning on January 1, 2022, and (b) if annual net sales equal or exceed the Sales Threshold and if the Purchasers receive 100% of their invested capital by December 31, 2024, the revenue interest rate will be decreased to a single rate of 0.4% of the Company’s net sales in the Covered Territory beginning on January 1, 2025. If the Third Payment is drawn down by the Company, the applicable royalty rates will increase by ~~one-third.~~one-third. The Covered Territory is the United States, but is subject to expand to include the world-wide net sales if the Company’s annual U.S. net sales are less than $350.0 million for the year ended December 31, 2021. The U.S. net sales milestone thresholds are not to be taken as financial guidance. The Purchasers’ rights to receive the Revenue Interests shall terminate on the date on which the Purchasers have received Revenue Interests payments of 195% of the then aggregate purchase price (the “Cumulative Purchaser Payments”) paid to the Company, unless the RIPA is terminated earlier.

Under the RIPA, the Company has an option (the “Call Option”) to terminate the RIPA and repurchase future Revenue Interests at any time upon advance written notice. Additionally, the Purchasers have an option (the “Put Option”) to terminate the RIPA and to require the Company to repurchase future Revenue Interests upon enumerated events such as a bankruptcy event, an uncured material breach, a material adverse effect or a change of control. If the Put Option is exercised prior to the first anniversary of the closing date by the Purchasers (except pursuant to a change of control), the required repurchase price will be 120% of the Cumulative Purchaser Payments (minus all payments Company has made to the Purchasers in connection with the Revenue Interests). In all other cases, if the Put Option or the Call Option are exercised, the required repurchase price will be 175% of the Cumulative Purchaser Payments (minus all payments Company has made to the Purchasers in connection with the Revenue Interests), if such option is exercised prior to the third anniversary of the closing date, and 195% of the Cumulative Purchaser Payments (minus all payments Company has made to the Purchasers in connection with the Revenue Interests), if such option is exercised thereafter.

In addition, the RIPA contains various representations and warranties, information rights, non-financial covenants, indemnification obligations and other provisions that are customary for a transaction of this nature.

In connection with the arrangement, as of June 30, 2020, the Company has recorded a liability, referred to as the “Revenue interest liability” in the condensed balance sheets, of ~~$124.4~~$166.3 million, net of ~~$0.6~~$0.5 million of ~~transaction~~capitalized issuance costs in connection with the RIPA. The Company imputes ~~non-cash~~ interest expense associated with this liability using the effective interest rate method. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including the level of forecasted net sales. The Company evaluates the interest rate quarterly based on its current net sales forecasts utilizing the prospective method.

A significant increase or decrease in net sales will materially impact the revenue interest liability, interest expense and the time period for repayment. The Company recorded approximately ~~$0.0~~$4.6 million and $8.8 million in interest expense related to this arrangement ~~as of~~for the three and six months ended June 30, ~~2019.~~2020, respectively.

The Company received $125.0 million in exchange for entering into the RIPA and $25.0 million in March 2020 upon receiving regulatory approval of NEXLETOL. The effective annual imputed interest rate is 10.1%. The Company incurred $0.6 million of issuance costs in connection with the RIPA, which will be amortized to interest expense over the estimated term of the RIPA. Payments made to Oberland as a result of the Company’s net sales will reduce the revenue interest liability.

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The following table summarizes the revenue interest liability activity during the six months ended June 30, 2020:


	(in thousands)
Revenue interest liability at December 31, 2019	$	132,544
Oberland funding for regulatory approval of NEXLETOL		25,000
Interest expense recognized		8,811
Revenue Interests payments		(64)
Revenue interest liability at June 30, 2020	$	166,291

9. Other Accrued Liabilities

Other accrued liabilities consist of the following:


	June 30,		December 31,
	2020		2019

	(in thousands)
Accrued compensation	$	10,868	$	7,818
Accrued professional fees		5,864		3,842
Accrued inventory		1,771		—
Accrued other		3,405		211
Total other accrued liabilities	$	21,908	$	11,871

10. Stock Compensation

~~2017 Inducement Equity~~Employee Stock Purchase Plan

In ~~May 2017,~~April 2020, the ~~Company’s~~ board of directors approved the ~~2017 Inducement Equity~~Esperion Therapeutics, Inc. 2020 Employee Stock Purchase Plan (the ~~“2017 Plan”~~"ESPP"). which was approved by the Company's shareholders on May 28, 2020. The ~~number~~ESPP allows eligible employees to authorize payroll deductions of up to 10% of their base salary or wages up to $25,000 annually to be applied toward the purchase of shares of the Company's common stock ~~available for awards~~on the last trading day of the offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global Select Market (i) on the first trading day of the offering period or (ii) the last day of any offering period. Offering periods under the ~~2017 Plan was set~~ESPP will generally be in six month increments, commencing on September 1 and March 1 of each calendar year with the administrator having the right to 750,000, with any shares of common stock that are forfeited, cancelled, held back upon the exercise or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of common stock, or otherwise terminated (other than by exercise) under the 2017 Plan added back to the shares of common stock available for issuance under the 2017 Plan.establish different offering periods.

~~2013 Stock Option and Incentive Plan~~The following table summarizes the activity relating to the Company’s options to purchase common stock for the six months ended June 30, 2020:


		Weighted-Average		Weighted-Average
		Exercise		Remaining	Aggregate
	Number of	Price		Contractual	Intrinsic
	Options	Per Share		Term (Years)	Value
					(in thousands)
Outstanding at December 31, 2019	4,677,929	$	39.31	6.82	$	109,054
Granted	234,940	$	61.14
Forfeited or expired	(134,945)	$	56.38
Exercised	(200,157)	$	23.74
Outstanding at June 30, 2020	4,577,767	$	40.61	6.10	$	72,396

In May 2015, the Company's stockholders approved the amended and restated 2013 Stock Option and Incentive Plan (as amended, the “2013 Plan”). The number of shares of common stock available for awards under the 2013 Plan was set to 2,975,000 shares, plus (i) shares of common stock that are forfeited, cancelled, held back upon the exercise or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting,

1617

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satisfied without the issuance of common stock or otherwise terminated (other than by exercise) under the 2013 Plan and the Company's 2008 Incentive Stock Option and Restricted Stock Plan are added back to the shares of common stock available for issuance under the 2013 Plan, and (ii) on January 1, 2016, and each January 1, thereafter, the number of shares of common stock reserved and available for issuance under the 2013 Plan will be cumulatively increased by 2.5% of the number of shares of common stock outstanding on the immediately preceding December 31, or such lesser number of shares of common stock determined by the compensation committee.

The 2017 Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), unrestricted stock awards and dividend equivalent rights. The 2013 Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, RSUs, unrestricted stock awards, cash-based awards, performance share awards and dividend equivalent rights. The Company incurs stock-based compensation expense related to stock options and RSUs. The fair value of RSUs is determined by the closing market price of the Company’s common stock on the date of grant. The fair value of stock options is calculated using a Black-Scholes option pricing model. The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation—Stock Compensation. Accordingly, compensation costs related to equity instruments granted are recognized over the requisite service periods of the awards on a straight-line basis at the grant-date fair value. In accordance with the adoption of ASU 2016-09, the Company accounts for forfeitures as they occur.

~~The following table summarizes the activity relating to the Company’s options to purchase common stock for the six months ended June 30, 2019:~~

Weighted-Average

Weighted-Average

Exercise

Remaining

Aggregate

Number of

Price

Contractual

Intrinsic


Options

Per Share

Term (Years)

Value

(in thousands)
Outstanding at December 31, 2018

5,303,723

$
37.01

7.42

$
83,473
Granted

433,375

$
49.53

Forfeited or expired

(218,582)

$
45.69

Exercised

(195,830)

$
18.16

Outstanding at June 30, 2019

5,322,686

$
38.36

7.09

$
77,958

The following table summarizes information about the Company’s stock option plan as of June 30, ~~2019:~~2020:


		Weighted-Average		Weighted-Average				Weighted-Average		Weighted-Average
		Exercise		Remaining	Aggregate			Exercise		Remaining	Aggregate
	Number of	Price		Contractual	Intrinsic		Number of	Price		Contractual	Intrinsic
	Options	Per Share		Term (Years)	Value		Options	Per Share		Term (Years)	Value
					(in thousands)						(in thousands)
Vested and expected to vest at June 30, 2019	5,322,686	$	38.36	7.09	$	77,958
Exercisable at June 30, 2019	3,097,363	$	31.74	5.81	$	65,172
Vested and expected to vest at June 30, 2020							4,577,767	$	40.61	6.10	$	72,396
Exercisable at June 30, 2020							3,195,452	$	35.88	5.12	$	65,786

~~During~~Stock-based compensation related to stock options was $5.5 million and $11.1 million for the three and six months ended June 30, 2020, respectively, including $0.3 million and $0.5 million for the three and six months ended June 30, 2020, respectively, that were capitalized into inventory, and $6.2 million and $12.6 million for the three and six months ended June 30, 2019, the Company recognized $6.2 million and $12.6 million, respectively, of stock-based compensation expense related to stock options. During the three and six months ended June 30, 2018, the Company recognized $5.5 million and $11.3 million, respectively, of stock-based compensation expense related to stock options.respectively. As of June 30, ~~2019,~~2020, there was ~~$63.5~~$44.0 million of unrecognized stock-based compensation expense related to unvested options, which will be recognized over a weighted-average period of ~~3.0~~2.4 years.

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The following table summarizes the activity relating to the Company’s RSUs for the six months ended June 30, ~~2019:~~2020:


		Weighted-Average			Weighted-Average
	Number of	Fair Value Per		Number of	Fair Value Per
	RSUs	Share		RSUs	Share
Outstanding and unvested at December 31, 2018	37,475	$	66.96
Outstanding and unvested at December 31, 2019				245,966	$	44.45
Granted	56,453	$	50.30	322,167	$	52.82
Forfeited				(28,921)	$	44.70
Vested	(10,150)	$	67.87	(53,587)	$	51.98
Outstanding and unvested at June 30, 2019	83,778	$	55.62
Outstanding and unvested at June 30, 2020				485,625	$	49.16

~~During~~Stock-based compensation related to RSUs was approximately $1.8 million and $3.3 million for the three and six months ended June 30, 2020, respectively, including $0.1 million and $0.1 million for the three and six months ended June 30, 2020, respectively, that were capitalized into inventory, and $0.4 million and $0.6 million for the three and six months ended June 30, 2019, the Company recognized $0.4 million and $0.6 million, respectively, of stock-based compensation expense related to RSUs. During the three and six months ended June 30, 2018, the Company recognized $0.2 million and $0.3 million, respectively, of stock-based compensation expense related to RSUs.respectively. As of June 30, ~~2019,~~2020, there was ~~$4.3~~$21.5 million of unrecognized stock-based compensation expense related to unvested RSUs, which will be recognized over a weighted-average period of ~~2.2~~3.2 years.

~~10.~~11. Leases

The Company has operating leases primarily related to the Company’s principal executive office, automobile leases and other IT related equipment. The lease for the principal executive office has a lease term of 5 years and the automobile leases and IT equipment leases primarily ~~has~~have a term of 3 years. During the six months ended June 30, 2020, the right of use operating lease assets and operating lease liabilities recognized on the condensed balance sheet increased by $4.6 million and $4.6 million from December 31, 2019, respectively, due to the addition of automobile leases and IT equipment associated with the onboarding of the Company’s commercial salesforce to support the commercialization of NEXLETOL and NEXLIZET. During the three and six months ended June 30, 2020, the Company recognized $0.6 million and $0.8 million, respectively, of operating lease costs, recognized on the condensed statements of operations, and paid cash for the amounts included in the measurement of lease liabilities of $0.6 million and $0.8 million, respectively, which were included in operating cash flows on the condensed statements of cash flows. During the three and six months ended June 30, 2019, the Company recognized less than $0.1 million and $0.1 million, respectively, of operating lease costs, recognized on the ~~Condensed Statements~~condensed statements of ~~Operations,~~operations, and paid cash for the amounts included in the measurement of lease liabilities of less than $0.1 million and $0.1 million, respectively, which were included in operating cash flows on the ~~Condensed Statements~~condensed statements of ~~Cash Flows.~~cash flows. At June 30, ~~2019,~~2020, the weighted-average remaining lease term of operating leases was ~~4.2~~2.7 years and the weighted average discount rate was ~~8.5%~~3.6%. There were no0 right-of-use assets obtained in exchange for lease obligations in the six months ended June 30, 2020 or 2019. The Company had no additional operating and finance leases that have not yet commenced as of June 30, 2020 or 2019.

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The following table summarizes the Company’s future maturities of operating lease liabilities as of June 30, ~~2019:~~2020:

(in thousands)
2019

$
136
2020

275
2021

259
2022

260
2023

216
Total lease payments

1,146
Less imputed interest

188
Total

$
958

~~The following table summarizes supplemental balance sheet information related to leases as of June 30, 2019:~~

Operating Leases

(in thousands)
Right of use operating lease assets (short-term)

$
198
Right of use operating lease assets (long-term)

734
Total right of use operating lease assets

$
932

Operating lease liabilities (short-term)

$
199
Operating lease liabilities (long-term)

759
Total lease obligations under operating leases

$
958


	(in thousands)
2020 (remaining)	$	1,209
2021		2,380
2022		2,333
2023		584
2024		—
Total lease payments		6,506
Less imputed interest		307
Total	$	6,199

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~~11.~~12. Income Taxes

There was no0 provision for income taxes for the three and six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, because the Company has incurred annual operating losses since inception. At June 30, ~~2019,~~2020, the Company continues to conclude that it is not more likely than not that the Company will realize the benefit of its deferred tax assets due to its history of losses. Accordingly, a full valuation allowance has been applied against the net deferred tax assets.

~~12.~~13. Net Income (Loss) Per Common Share

Basic net ~~loss~~income (loss) per share is calculated by dividing net ~~loss~~income (loss) by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net ~~loss~~income per share is computed by dividing net ~~loss~~income by the weighted-average number of common stock equivalents outstanding for the period, including shares that potentially could be dilutive if they were exercised during the period, determined using the treasury-stock method. For purposes of this calculation, stock options and unvested RSUs are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The following table summarizes the calculation of basic and diluted net income (loss) per share:


	For the three months ended,				For the six months ended,				For the three months ended ,				For the six months ended ,
	June 30,		June 30,		June 30,		June 30,		June 30,		June 30,		June 30,		June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Net income (loss) (in thousands)	$	(54,221)	$	(45,730)	$	33,158	$	(91,860)	$	124,611	$	(54,221)	$	46,362	$	33,158

Weighted average shares - basic		26,968,818		26,786,796		26,906,149		26,696,495
Weighted average common shares outstanding - basic										27,665,728		26,968,818		27,592,479		26,906,149
Effect of dilutive shares:
Warrants for common stock		—		—		4,230		—		—		—		—		4,230
Common shares under option		—		—		1,607,093		—		1,139,280		—		1,291,353		1,607,093
Unvested RSUs		—		—		543		—		49,437		—		64,226		543
Dilutive shares		—		—		1,611,866		—		1,188,717		—		1,355,579		1,611,866
Weighted average shares - diluted		26,968,818		26,786,796		28,518,015		26,696,495
Weighted average common shares outstanding - diluted										28,854,445		26,968,818		28,948,058		28,518,015

Net income (loss) per common share - basic	$	(2.01)	$	(1.71)	$	1.23	$	(3.44)	$	4.50	$	(2.01)	$	1.68	$	1.23
Net income (loss) per common share - diluted	$	(2.01)	$	(1.71)	$	1.16	$	(3.44)	$	4.32	$	(2.01)	$	1.60	$	1.16

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The shares outstanding at the end of the respective periods presented below were excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect:


	For the three	For the six	For the three and
	months ended,	months ended,	six months ended,	For the three months ended ,		For the six months ended ,
	June 30,	June 30,	June 30,	June 30,	June 30,	June 30,	June 30,
	2019	2019	2018	2020	2019	2020	2019

Warrants for common stock	—	—	8,230
Common shares under option	5,322,686	2,511,692	4,493,209	2,427,074	5,322,686	2,391,374	2,511,692
Unvested RSUs	83,778	77,653	33,125	295,423	83,778	190,565	77,653
Total potential dilutive shares	5,406,464	2,589,345	4,534,564	2,722,497	5,406,464	2,581,939	2,589,345

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~~13.~~14. Statements of Cash Flows

The following table provides a reconciliation of cash and cash equivalents and restricted cash presented on the ~~Condensed Balance Sheets~~condensed balance sheets to the same amounts presented on the ~~Condensed Statements~~condensed statements of ~~Cash Flows~~cash flows on June 30, 2020 and 2019 and ~~2018.~~December 31, 2019 and 2018 (in thousands):


	June 30,		June 30,
	2019		2018		June 30,		June 30,		December 31,		December 31,
					2020		2019		2019		2018
Cash and cash equivalents	$	274,344	$	24,380	$	298,489	$	274,344	$	166,130	$	36,973
Restricted cash		928		—		—		928		928		—
Total cash and cash equivalents and restricted cash shown on the Condensed Statements of Cash Flows	$	275,272	$	24,380
Total cash and cash equivalents and restricted cash shown on the condensed statements of cash flows					$	298,489	$	275,272	$	167,058	$	36,973

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our annual report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019 and other filings that we make with the Securities and Exchange Commission.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These forward-looking statements are based on our management’s belief and assumptions and on information currently available to management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events, including our clinical development and commercialization plans, or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, including in relation to the clinical development, commercialization plans, or ~~regulatory~~ approval of expanded indications for bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet~~tablets to be materially different from any future results, performance or achievements, including in relation to the clinical development, commercialization plans, or ~~regulatory~~ approval of expanded indications for bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet,~~tablets, and the impact of COVID-19 on our business, clinical activities and commercial development plans, expressed or implied by these forward-looking statements.

Forward-looking statements are often identified by the use of words such as, but not limited to, “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other similar terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and that could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those referred to or discussed in or incorporated by reference into the section titled “Risk Factors” included in Item 1A of Part II of this Quarterly Report on Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

The forward-looking statements in this report represent our views as of the date of this quarterly report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

We use the terms “we,” “us,” “our,” or the "Company” in this report to refer to Esperion Therapeutics, Inc.

Overview

Corporate Overview

We are the Lipid Management Company, a ~~late-stage~~ pharmaceutical company focused on developing and commercializing ~~complementary, cost-effective, convenient,~~affordable, oral, once-daily, ~~oral therapies~~non-statin medicines for the treatment of patients with elevated low density lipoprotein cholesterol, or LDL-C. Through scientific and clinical excellence, and a deep understanding of cholesterol biology, the experienced Lipid Management Team at Esperion is committed to developing new LDL-C lowering ~~therapies~~medicines that will make a substantial impact on reducing global cardiovascular disease, or CVD; the leading cause of death around the world. ~~Bempedoic~~NEXLETOL® (bempedoic acid) and NEXLIZET^TM (bempedoic acid and ezetimibe) tablets are the ~~bempedoic acid / ezetimibe combination tablet are targeted therapies that are being developed to significantly lower elevated~~first, oral, once-daily, non-statin LDL-C ~~levels~~lowering medicines approved in the U.S. in nearly 20 years for patients with atherosclerotic cardiovascular disease, or ASCVD, or heterozygous familial hypercholesterolemia, ~~including patients inadequately treated with current lipid-modifying therapies.~~or HeFH.

On February ~~20, 2019,~~21, 2020, we ~~submitted~~announced that the ~~new drug application, or NDA, for bempedoic acid and on February 26, 2019, we submitted the NDA for the bempedoic acid / ezetimibe combination tablet to the~~U.S. Food and Drug Administration, or FDA, approved NEXLETOL as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with HeFH or established ASCVD who require additional lowering of LDL-C. The effect of NEXLETOL on cardiovascular morbidity and mortality has not been determined. NEXLETOL is the first oral, once-daily, non-statin LDL-C lowering ~~indications. On May 5, 2019, we announced that the FDA accepted the NDAs~~medicine approved since 2002 for bempedoic acid and the bempedoic acid / ezetimibe combination tablet for filing and regulatory review. The Prescription Drug User Fee Act (“PDUFA”) goal date for completion of the bempedoic acid NDA review is set forindicated patients. NEXLETOL became commercially available on March 30, 2020.

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On February ~~21,~~26, 2020, we announced that the FDA approved NEXLIZET as an adjunct to diet and maximally tolerated statin therapy for the ~~PDUFA goal date~~treatment of adults with HeFH or established ASCVD who require additional lowering of LDL-C. The effect of NEXLIZET on cardiovascular morbidity and mortality has not been determined. NEXLIZET is the first non-statin, LDL-C lowering fixed combination drug product ever approved. NEXLIZET became commercially available on June 4, 2020.

On January 31, 2020, the Committee for ~~completion~~Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, adopted a positive opinion for the Marketing Authorisation Applications, or MAAs, of both bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet NDA review~~tablets, recommending approval for the treatment of hypercholesterolemia and mixed dyslipidemia. On April 6, 2020, we announced that the European Commission, or EC, approved NILEMDO™ (bempedoic acid) and NUSTENDI™ (bempedoic acid and ezetimibe) tablets for the treatment of hypercholesterolemia and mixed dyslipidemia. The decision is ~~set for February 26, 2020. These dates~~applicable to all 27 European Union member states plus the United Kingdom, Iceland, Norway and Liechtenstein. NILEMDO (bempedoic acid) and NUSTENDI (bempedoic acid and ezetimibe) are ~~consistent with our expectations and reflect~~ the ~~standard review period. The FDA has communicated that there is no current plan to hold an advisory committee meeting to discuss the applications.~~

~~On February 11, 2019, we submitted the Marketing Authorization Applications, or MAAs,~~branded products names for bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet to~~tablets in Europe. NILEMDO is the ~~European Medicines Agency, or EMA. On February 28, 2019, the EMA completed formal validation of the MAAs for bempedoic acid and the bempedoic acid / ezetimibe combination tablet for~~first, oral, non-statin, LDL-C lowering ~~indications.~~medicines approved in Europe in almost two decades for indicated patients, and NUSTENDI is the first non-statin, LDL-C lowering combination medicine ever approved in Europe.

On ~~January 2, 2019,~~April 17, 2020, we entered into a license and collaboration agreement, or the Otsuka Agreement, with Otsuka Pharmaceutical Co., Ltd., or Otsuka. Pursuant to the Otsuka Agreement, we granted Otsuka exclusive development and commercialization rights to NEXLETOL and NEXLIZET in Japan. Otsuka will be responsible for all development, regulatory, and commercialization activities in Japan. In addition, Otsuka will fund all clinical development costs associated with the program in Japan. We estimate this amount to total up to $100 million over the next few years. We received an upfront cash payment of $60 million in April 2020 and will receive up to an additional $450 million in total development and sales milestones. We will also receive tiered royalties ranging from 15 percent to 30 percent on net sales in Japan.

On June 18, 2020, we entered into an amendment to the license and collaboration agreement, or LCA Amendment, with Daiichi Sankyo Europe GmbH, or ~~DSE.~~DSE, dated as of January 2, 2019. In June 2020, we completed the transfer of the MAAs for NILEMDO and NUSTENDI. Pursuant to the ~~agreement,~~terms of the amendment, DSE paid us the second $150 million milestone based on completion of the NUSTENDI MAA transfer rather than the first product sale in the EU, which is anticipated later this year. Prior to the execution of the LCA Amendment, the milestone payment was due upon the first commercial sale in Europe, which is anticipated later this year. Additionally, we and DSE have ~~granted~~agreed to expand the territory in which DSE has exclusive commercialization rights to ~~bempedoic acid~~NILEMDO and ~~the bempedoic acid / ezetimibe combination tablet~~NUSTENDI to include Turkey. DSE’s designated affiliate in ~~the European Economic Area and Switzerland, or the DSE Territory. DSE~~Turkey will be solely responsible, at its sole cost and expense, for ~~commercialization~~all regulatory matters relating to such products in ~~the DSE Territory. We remain responsible~~Turkey, including obtaining Regulatory Approval for ~~clinical development, regulatory and manufacturing activities for the licensed products globally, including~~such product in the DSE Territory. Pursuant to the agreement, the consideration consists of a $150.0 million upfront cash payment as well as $150.0 million cash payment upon first commercial sales in the DSE Territory. We are also eligible to receive a substantial additional regulatory milestone payment upon the grant of the marketing authorization in the European Union for the CV risk reduction label, depending on the range of relative risk reduction in the CLEAR Outcomes study. In addition, we are eligible to receive additional sales milestone payments. Finally, we will receive tiered fifteen percent (15%) to twenty-five percent (25%) royalties on net DSE Territory sales.

On June 26, 2019, we entered into a Revenue Interest Purchase Agreement, or RIPA, with Eiger II SA LLC, or Oberland, an affiliate of Oberland Capital LLC, and the Purchasers named therein. Pursuant to the RIPA, Oberland paid us $125.0 million on closing, less certain transaction expenses, and, subject to the RIPA, we are eligible for an additional $25.0 million upon certain regulatory approval of our product candidates and $50.0 million at our option upon reaching certain sales thresholds. As consideration for the payments, Oberland has the right to receive certain revenue interests from us based on the net sales of certain products, once approved, which will be tiered payments initially ranging from 2.5% to 7.5% of our net sales in the covered territory. The initial mid-single digit repayment rate on U.S. revenue steps down to less than one percent rate upon certain revenue achievements. Esperion reacquires 100% revenue rights upon repayment completion. Refer to Note 8 “Liability Related to the Revenue Interest Purchase Agreement” in the Notes to the Condensed Financial Statements for further information.

~~We are conducting a global cardiovascular outcomes trial, or CVOT, – known as~~ C~~holesterol~~ L~~owering via B~~E~~mpedoic Acid, an~~ A~~CL-inhibiting~~ Regimen (CLEAR) Outcomes, for bempedoic acid in 12,604 patients with hypercholesterolemia and high CVD risk and who can be considered statin averse. We initiated the CLEAR Outcomes CVOT in December 2016 and expect the study to be fully enrolled in the third quarter of 2019. We intend to use positive results from this CVOT to support submissions for a CV risk reduction indication in the U.S. and Europe by 2022.Turkey.

We were incorporated in Delaware in January 2008 and commenced our operations in April 2008. Since our inception, we have focused substantially all of our efforts and financial resources on developing bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet.~~tablets. In February 2020, the FDA approved NEXLETOL and NEXLIZET. NEXLETOL was commercially available in the U.S. on March 30, 2020 and NEXLIZET was commercially available in the U.S. on June 4, 2020. We have funded our operations to date primarily through proceeds from sales of preferred stock, convertible promissory notes and warrants, public offerings of common stock, the incurrence of indebtedness, through collaborations with third parties and revenue interest purchase agreements, and we have incurred losses in each year since our inception.

~~We do not have any products approved for sale. To date, we have not~~During the three and six months ended June 30, 2020, our net income was $124.6 million and $46.4 million, respectively, primarily due to revenue generated ~~any revenue~~ from ~~the sales of bempedoic acid or the bempedoic acid / ezetimibe combination tablet.~~our collaboration agreements with DSE and Otsuka. In the three and six months ended June 30, 2019, the collaboration agreement with DSE provided $1.0 million and $146.4 million in revenue, respectively, driving a net loss of $54.2 million in the three months ended June 30, 2019 and net income of $33.2 million in the six months ended June 30, 2019. ~~The three months ended March 31, 2019 was the first quarter we have been profitable. We incurred a net loss of $45.7 million and $91.9 million for the three and six months ended June 30, 2018.~~ All of our prior net losses resulted from costs incurred in connection with research and development programs and general and administrative costs

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associated with our operations. We expect to incur significant expenses and operating losses for the foreseeable future. We expect our expenses to increase in connection with our ongoing activities, including, among others:

●commercializing NEXLETOL and NEXLIZET tablets in the U.S.; and

●

completing the clinical development activities for the CLEAR ~~Outcomes CVOT;~~global cardiovascular outcomes trial, or CVOT.

●

~~seeking regulatory approvals for bempedoic acid and the bempedoic acid / ezetimibe combination tablet;~~

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●

~~commercializing bempedoic acid and the bempedoic acid / ezetimibe combination tablet, if approved; and~~

●

~~operating as a public company.~~

Accordingly, we may need additional financing to support our continuing operations and further the development of our ~~product candidates.~~products. We may seek to fund our operations and further development activities through collaborations with third parties, strategic alliances, licensing arrangements, permitted debt financings, permitted royalty-based financings, permitted public or private equity offerings or through other sources. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a material adverse effect on our financial condition and our ability to pursue our business strategy or continue operations. We will need to generate significant revenues to achieve profitability, and we may never do so.

Product Overview

~~Bempedoic acid is our lead, non-statin, orally available, once-daily, LDL-C lowering therapy. With a targeted mechanism of action, bempedoic acid~~NEXLETOL is a first-in-class ATP Citrate Lyase, or ACL, inhibitor that ~~reduces~~lowers LDL-C by reducing cholesterol biosynthesis and ~~lowers LDL-C by~~ up-regulating the LDL ~~receptor. Similar to statins, bempedoic acid also reduces high sensitivity C-reactive protein, or hsCRP, a key marker of inflammation associated with cardiovascular disease.~~receptors. Completed Phase 3 studies conducted in more than ~~4,000~~3,000 patients, with over ~~2,600~~2,000 patients treated with ~~bempedoic acid,~~NEXLETOL, demonstrated ~~up to~~an average 18 percent placebo corrected LDL-C lowering when used in patients on moderate or high-intensity statins. NEXLETOL was approved by the FDA in February 2020 as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with ~~moderate- and high-intensity statins and 21 to 28 percent placebo corrected LDL-C~~HeFH or established ASCVD who require additional lowering ~~when used with low dose or no background statin.~~of LDL-C.

~~Through the~~NEXLIZET contains bempedoic acid and ezetimibe and lowers elevated LDL-C through complementary mechanisms of action ~~of inhibition of~~by inhibiting cholesterol synthesis (bempedoic acid) and inhibition of cholesterol absorption (ezetimibe), the bempedoic acid / ezetimibe combination tablet is a non-statin, orally available, once-daily, LDL-C lowering therapy. Inhibition of ACL by bempedoic acid reduces cholesterol biosynthesis and lowers LDL-C by up-regulating the LDL receptor. Inhibition of Niemann-Pick C1-Like 1 by ezetimibe results in ~~reduced absorption of cholesterol from the gastrointestinal tract, thereby reducing delivery of cholesterol to~~ the liver ~~which~~and absorption in ~~turn upregulates~~ the ~~LDL receptors.~~intestine. Phase 3 data demonstrated ~~that this combination results in~~NEXLIZET lowered LDL-C by a 29mean of 38 percent compared to placebo ~~corrected LDL-C lowering~~ when ~~used with~~added on to maximally tolerated ~~statins,~~statins. NEXLIZET was approved by the FDA in February 2020 as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with HeFH or established ASCVD who require additional lowering of LDL-C.

NILEMDO is a ~~44 percent~~first-in-class ACL inhibitor that lowers LDL-C ~~lowering when used~~by reducing cholesterol biosynthesis and up-regulating the LDL receptors. NILEMDO was approved by the EC in March 2020 for use in adults with ~~no background~~primary hypercholesterolemia (heterozygous familial and non-familial) or mixed dyslipidemia, as an adjunct to diet in combination with a statin ~~(post-hoc analysis),~~or statin with other lipid-lowering therapies in adult patients unable to reach LDL-C goals with the maximum tolerated dose of a statin, or alone or in combination with other lipid-lowering therapies as an adjunct to diet in adult patients who are statin-intolerant, or for whom a statin is contraindicated.

NUSTENDI contains bempedoic acid and ezetimibe and lowers elevated LDL-C through complementary mechanisms of action by inhibiting cholesterol synthesis in the liver and absorption in the intestine. NUSTENDI was approved by the EC in March 2020 for use in adults with primary hypercholesterolemia (heterozygous familial and non-familial) or mixed dyslipidemia, as an adjunct to diet in combination with a ~~34 percent reduction~~statin in ~~hsCRP.~~adult patients unable to reach LDL-C goals with the maximum tolerated dose of a statin in addition to ezetimibe, alone in patients who are either statin-intolerant or for whom a statin is contraindicated, and are unable to reach LDL-C goals with ezetimibe alone, or as an adjunct to diet in adult patients already being treated with the combination of bempedoic acid and ezetimibe as separate tablets with or without statin.

During the six months ended June 30, 2020, we incurred $33.6 million in expenses related to our CLEAR Outcomes CVOT and other ongoing clinical studies.

During the six months ended June 30, 2019, we incurred $56.9 million in expenses related to our CLEAR Outcomes CVOT, our open-label extension study, and our 1002FDC-058 study.

During the six months ended June 30, 2018, we incurred $61.0 million in expenses related to the four studies in our global pivotal Phase 3 LDL-C lowering program, our CLEAR Outcomes CVOT, our 1002FDC-053 study, our open-label extension study, our 1002FDC-058 study and our Phase 2 (1002-39) clinical study of bempedoic acid when added-on to an injectable proprotein convertase subtilisin/kexin type 9 inhibitor, or PCSK9i, therapy in patients with hypercholesterolemia.

~~Program Developments~~

Results from the initial clinical study of the 100 mg modified release formulation of bempedoic acid demonstrated consistent twenty nine percent (29%) LDL-C lowering, with approximately one-half the active pharmaceutical ingredient of the current 180 mg bempedoic acid tablet, as well as favorable safety and Pharmacokinetics, or PK, parameters. These results provide initial proof-of-concept for the modified release formulation

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~~of bempedoic acid to increase efficacy, extend the patent life of the bempedoic acid franchise into 2038 while utilizing a 505(b)(2) regulatory pathway to approval, and reduce manufacturing costs.~~

Ongoing Clinical Studies

~~1002FDC-058 – Phase 2 efficacy and safety study of the bempedoic acid / ezetimibe combination tablet in patients with hypercholesterolemia and Type 2 Diabetes~~

1002FDC-058 is a Phase 2 clinical study assessing the efficacy and safety of the bempedoic acid / ezetimibe combination tablet in patients with hypercholesterolemia and type 2 diabetes. Initiated in June 2018, the 12-week, randomized, double-blind, placebo-controlled, parallel-dose study consists of three treatment arms evaluating the efficacy and safety of a once-daily, oral fixed dose combination tablet of bempedoic acid 180 mg and ezetimibe 10 mg versus placebo and versus ezetimibe 10 mg alone. The study is expected to enroll approximately 179 patients at approximately 42 sites across the U.S. The co-primary objectives of the study are to assess the 12-week LDL-C lowering efficacy in patients treated with the bempedoic acid / ezetimibe combination tablet versus placebo and versus ezetimibe 10 mg alone. Secondary objectives include evaluating 12-week hsCRP, non-HDL-C, apolipoprotein B, or apoB, total cholesterol and triglycerides. Exploratory objectives include 12-week HbA1c, fasting glucose, fasting insulin and additional glycemic measurements. We expect to report top-line results in the third quarter of 2019.

~~Open-Label Extension of Study 1—Global pivotal Phase 3 long-term safety and tolerability study in patients with hypercholesterolemia on maximally tolerated background lipid-modifying therapy~~

Safety data will be obtained from an open-label extension study which completed enrollment of 1,462 of the 2,230 patients enrolled in Study 1 in March 2018. Initiated in February 2017, this open-label extension study will evaluate the long-term safety of bempedoic acid 180 mg in high CVD risk patients with hypercholesterolemia and with atherosclerotic cardiovascular disease, or ASCVD, and/or heterozygous familial hypercholesterolemia, or HeFH, whose LDL-C is not adequately controlled with current lipid-modifying therapies, and who are taking maximally tolerated statin therapy. This open-label extension study will be conducted at approximately 100 sites included in the parent study in the U.S., Canada and Europe. The primary objective is to assess the long-term safety in patients treated with bempedoic acid for up to 1.5 years. Secondary objectives include evaluating the 52- and 78-week effects of bempedoic acid on lipid and cardiometabolic risk markers, including LDL-C, non-HDL-C, total cholesterol, apoB and hsCRP. The open-label extension study will be completed in the fourth quarter of 2019.

Global Cardiovascular Outcomes Trial—CLEAR Outcomes

CLEAR Outcomes is ana Phase 3, event driven, ~~global,~~ randomized, multicenter, double-blind, placebo-controlled clinical study designed to ~~assess the effects~~evaluate whether treatment of bempedoic acid reduces the risk of cardiovascular events in patients with ~~ASCVD and/~~statin intolerance who have cardiovascular disease or ~~HeFH, or who~~ are at high risk for CVD, with hypercholesterolemia and who are only able to tolerate less than the lowest approved daily starting dose of a statin and can be considered statin averse. The CLEAR Outcomes CVOT is expected to enroll approximately 12,600 patients with ASCVD or at high risk for CVD in over 1,000 sites in approximately 30 countries. The study is expected to enroll over a 30 month period with a total estimated study duration of approximately 4.75 years. The expected average treatment duration will be 3.75 years with a minimum treatment duration of approximately 2.25 years. Patients enrolling in the study will be required to have a history of, or be at high risk for, CVD with LDL-C levels greater than 100 mg/dL despite background lipid-lowering therapy, resulting in an expected average baseline LDL-C level in all patients of approximately 135 mg/dL.cardiovascular disease. The primary ~~efficacy~~ endpoint of the ~~event-driven global~~ study is the effect of bempedoic acid ~~versus placebo~~ on ~~the risk of~~ major adverse cardiovascular events (cardiovascular death, non-fatal myocardial infarction, non-fatal stroke, or coronary revascularization; also referred to as "four-component MACE"). CLEAR Outcomes is designed to provide 90 percent power to detect an approximately 15 percent relative risk reduction in the primary endpoint in the bempedoic acid treatment group as compared to the placebo group and is expected to complete with a minimum of 1,620 patients experiencing the primary endpoint.

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The study over-enrolled with 14,032 patients with hypercholesterolemia and high cardiovascular disease risk at over 1,400 sites in 32 countries. Eligible patients at high risk (LDL-C >100 mg/dL in primary prevention) for cardiovascular disease or with cardiovascular disease (LDL-C between 100 mg/dL to 190 mg/dL in secondary prevention) and who are only able to tolerate less than the lowest approved daily starting dose of a statin and considered statin averse, were randomized to receive bempedoic acid 180 mg once-daily or placebo. The expected average baseline LDL-C level in all patients is between 135 mg/dL and 140 mg/dL.

CLEAR Outcomes will conclude once the predetermined number of MACE endpoints occur. We initiated CLEAR Outcomes in December 2016 ~~closed patient screening~~and completed enrollment in ~~June 2019, and~~August 2019. The expected average treatment duration will be 3.75 years with a minimum treatment duration of approximately 2.25 years. Based on estimated cardiovascular event rates, we expect to ~~complete enrollment during~~meet the ~~third quarter~~target number of ~~2019.~~events in the second half of 2022. The study is intended to support our submissions for a CV risk reduction indication in the U.S., Europe and ~~Europe~~other territories.

The COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus, or COVID-19, as a pandemic, which continues to spread throughout the United States and worldwide. We could be materially and adversely affected by ~~2022.~~the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the recent outbreak of COVID-19. We are monitoring the global outbreak and spread of COVID-19 and have taken steps to identify and mitigate the adverse impacts on, and risks to, our business posed by its spread and actions taken by governmental and health authorities to address the COVID-19 pandemic. The spread of COVID-19 has caused us to modify our business practices, including implementing a work-from-home policy for all employees who are able to perform their duties remotely and restricting all nonessential travel, and we expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, the patients we serve and other business partners in light of COVID-19. Given the fluidity of the COVID-19 pandemic however, we do not yet know the full extent of the potential impact of COVID-19 on our business operations. The ultimate extent of the impact of any epidemic, pandemic, outbreak, or other public health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic, outbreak, or other public health crisis and actions taken to contain or prevent the further spread, among others. Accordingly, we are unable to reliably estimate the extent to which our business, financial condition and results of operations will or has been affected, including any impacts on product sales or research and development expense. To date, we have not experienced any interruption of our supply of drug products needed to support our ongoing clinical study and product sales. We remain focused on maintaining a strong balance sheet, liquidity and financial flexibility and continue to monitor developments as we deal with the disruptions and uncertainties from a business and financial perspective relating to COVID-19. We will continue to work diligently with our partners and stakeholders to continue supporting patient access to our approved medicines, advancing our product under regulatory review as well as in our clinical studies to the extent safe to do so for patients, caregivers and healthcare practitioners, and ensuring the continuity of our manufacturing and supply chain. For additional information related to the potential impact of COVID-19 on our business, please read Part II-Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.

Financial Operations Overview

Product sales, net

Product sales, net is related to our sales of NEXLETOL and NEXLIZET. NEXLETOL was commercially available in the U.S. on March 30, 2020 and NEXLIZET was commercially available in the U.S. on June 4, 2020

Collaboration revenue

Collaboration revenue is related to our collaboration agreements with DSE and Otsuka. Collaboration revenue in the three and six months ended June 30, 2020, was primarily related to the $150.0 million milestone from the MAA transfer to DSE and the $60.0 million from the upfront payment with Otsuka. In the three and six months ended June 30, 2019, collaboration revenue was primarily related to the initial recognition of the $150.0 million upfront payment from our collaboration agreement with DSE.

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~~Financial Operations Overview~~

~~Revenue~~Cost of goods sold

~~To date, we have not generated any revenue~~Cost of goods sold is related to our net product sales of NEXLETOL and NEXLIZET and the cost of goods sold from ~~product sales. In~~our supply agreements with collaboration partners. Prior to the ~~future, we may never generate revenue from the sale~~FDA approval of ~~bempedoic acid or the bempedoic acid / ezetimibe combination tablet or other product candidates. In the three~~NEXLETOL and ~~six months ended June 30, 2019, we recognized $1.0 million and $146.4 million of revenue~~NEXLIZET, expenses associated with the ~~$150.0 million upfront payment from~~manufacturing of our collaboration agreement with DSE. We expect to recognize the remaining $3.6 million ratably over the period leading up to the approval of the MAA acceptance by the EMA due to an ongoing performance obligation related to the ongoing regulatory efforts for the MAA in the DSE Territory. If we fail to complete theproducts were recorded as research and development of bempedoic acid or the bempedoic acid / ezetimibe combination tablet or any other product candidates and secure approval from regulatory authorities, our ability to generate future revenue and our results of operations and financial position will be adversely affected.expense.

Research and Development Expenses

Since our inception, we have focused our resources on our research and development activities, including conducting nonclinical, preclinical and clinical studies. Our research and development expenses consist primarily of costs incurred in connection with the development of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet,~~tablets, which include:

●

expenses incurred under agreements with consultants, contract research organizations, or CROs, and investigative sites that conduct our preclinical and clinical studies;

●

the cost of acquiring, developing and manufacturing clinical study materials and commercial product manufacturing supply ~~as we approach anticipated~~prior to product approval, including the procurement of ezetimibe in our continued development of our bempedoic acid / ezetimibe combination tablet;

●

employee-related expenses, including salaries, benefits, stock-based compensation and travel expenses;

●

allocated expenses for rent and maintenance of facilities, insurance and other supplies; and

●

costs related to compliance with regulatory requirements.

We expense research and development costs as incurred. To date, substantially all of our research and development work has been related to bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet.~~tablets. Costs for certain development activities, such as clinical studies, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors. Our direct research and development expenses consist principally of external costs, such as fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical studies. We do not allocate acquiring and manufacturing clinical study materials, salaries, stock-based compensation, employee benefits or other indirect costs related to our research and development function to specific programs.

~~Our~~We will continue to incur research and development expenses ~~are expected to continue~~ in the foreseeable future as they relate to our ongoing CLEAR Outcomes CVOT ~~our NDA and MAA submissions, commercial product manufacturing supply as we approach anticipated approval~~ and any other development programs or additional indications we choose to pursue. We cannot determine with certainty the duration and completion costs associated with the ongoing or future clinical studies of bempedoic acid and the bempedoic acid / ezetimibe combination tablet. Also, we cannot conclude with certainty if, or when, we will generate revenue from the commercialization and sale of bempedoic acid or the bempedoic acid / ezetimibe combination tablet, if ever. We may never succeed in obtaining regulatory approval for bempedoic acid or the bempedoic acid / ezetimibe combination tablet.tablets. The duration, costs and timing associated with the development ~~and commercialization~~ of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet~~tablets will depend on a variety of factors, including uncertainties associated with the results of our clinical studies and our ability to obtain regulatory ~~approval.~~approval outside the U.S. and Europe. For example, if ~~the FDA or another~~a regulatory authority were to require us to conduct clinical studies beyond

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those that we currently anticipate will be required for the completion of clinical development or post-commercialization clinical studies of bempedoic acid or the bempedoic acid / ezetimibe combination ~~tablet, or if we experience significant delays in enrollment in any of our clinical studies,~~tablets, we could be required to expend significant additional financial resources and time on the completion of clinical development or post-commercialization clinical studies of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet.~~tablets.

Selling, General and Administrative Expenses

~~General~~Selling, general and administrative expenses primarily consist of salaries and related costs for personnel, including stock-based compensation, associated with our sales, executive, accounting and finance, commercial, operational and other administrative functions. Other general and administrative expenses include selling expenses, facility-related costs, communication expenses and professional fees for legal, patent prosecution, protection and review, consulting and accounting services.

We anticipate that our selling, general and administrative expenses will increase in the future in connection with the ~~continued research and development and~~ commercialization of ~~bempedoic acid~~NEXLETOL and ~~the bempedoic acid / ezetimibe combination tablet,~~NEXLIZET, increases in our headcount, expansion of our information technology infrastructure, and increased expenses associated with being a public company and complying with exchange listing and Securities and Exchange Commission, or SEC, requirements. These increases will likely include higher legal, compliance, accounting and investor and public relations expenses.

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Interest Expense

Interest expense is related to our Revenue Interest Purchase Agreement, or RIPA, with Eiger III SA LLC, or Oberland, an affiliate of Oberland Capital.

Other Income, Net

Other income, net, primarily relates to interest income and the accretion or amortization of premiums and discounts earned on our cash, cash equivalents and investment securities. Costs during the three and six months ended June 30, 2018 also includes interest expense associated with our credit facility and non-cash interest costs associated with the amortization of the related debt discount, deferred issuance costs and final payment fee.

Critical Accounting Policies and Significant Judgments and Estimates

Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our financial statements. We evaluate our estimates and judgments on an ongoing basis, including those related to ~~accrued expenses~~our collaboration agreements and ~~stock-based compensation.~~revenue interest liability. We base our estimates on historical experience, known trends and events, contractual milestones and other various factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

~~Revenue Recognition - Collaboration Revenue~~

We have entered into an agreement related to our activities to develop, manufacture, and commercialize our product candidates. We earn collaboration revenue in connection with a collaboration agreement to develop and/or commercialize product candidates where we deem the collaborator to be our customer. We have adopted ASC 606, Revenue from Contracts with Customers, and under the terms of the standard, revenue is measured as the amount of consideration we expect to be entitled to in exchange for transferring promised goods or providing services to a customer. Revenue is recognized when (or as) we satisfy performance obligations under the terms of a contract. Depending on the terms of the arrangement, we may defer the recognition of all or a portion of the consideration received as the performance obligations are satisfied.

The collaboration agreement may require us to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate. In the agreement involving multiple goods or services promised to be transferred to a customer, we must assess, at the inception of the contract, whether each promise represents a separate

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~~performance obligation (i.e., is "distinct"), or whether such promises should be combined as a single performance obligation.~~

The terms of the agreement typically include consideration to be provided to us in the form of non-refundable up-front payments, development milestones, sales milestones, and royalties on sales of products within a respective territory.

At the inception of the contract, the transaction price reflects the amount of consideration we expect to be entitled to in exchange for transferring promised goods or services to our customer. In the arrangement where we satisfy performance obligation(s) during the regulatory phase over time, we recognize collaboration revenue typically using an input method on the basis of our regulatory costs incurred relative to the total expected cost which determines the extent of our progress toward completion. We review the estimate of the transaction price and the total expected cost each period, and make revisions to such estimates as necessary.

Under our collaboration agreement, product sales and cost of sales may be recorded by our collaborators as they are deemed to be the principal in the transaction. We receive royalties from the commercialization of such products, and record our share of the variable consideration, representing a percentage of net product sales, as collaboration revenue in the period in which such underlying sales occur and costs are incurred by our collaborator. Our collaborator will provide us with estimates of our royalties for such quarter; these estimates are reconciled to actual results in the subsequent quarter, and the royalty is adjusted accordingly, as necessary.

~~Recent Accounting Pronouncements~~

In November 2018, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update, or ASU, 2018-08, which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Accounting Standards Codification, or ASC, 606 when the collaborative arrangement participant is a customer in the context of a unit of account. The standard is effective for public companies for fiscal years beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted, included in any interim period, provided an entity has already adopted ASC 606 or does so concurrently with the adoption of this guidance. We early adopted this guidance as of January 1, 2019, and implemented the new guidance in our consideration of the accounting for the DSE collaboration signed on January 2, 2019. Refer to Note 2 “Summary of Significant Accounting Policies” and Note 3 “Collaborations with Third Parties” in the Notes to the Condensed Financial Statements for further information.

In February 2016, the FASB issued ASU 2016-02, which was amended by subsequent updates (collectively the “lease standard” or “ASC 842”), and is intended to improve financial reporting about leasing transactions. The updated guidance requires a lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. We adopted this standard on January 1, 2019 using the modified retrospective method. Results for the reporting period beginning after December 31, 2018 have been presented in accordance with the standard, while results for prior periods have not been adjusted. We recognized $1.0 million and $1.0 million of operating lease assets and operating lease liabilities, respectively, on our balance sheets as of January 1, 2019, primarily related to the lease agreement for our principal executive office. Refer to Note 9 “Leases” in the Notes to the Condensed Financial Statements for further information.

There have been no other material changes to the significant accounting policies previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019. As we continue through fiscal year 2020, we expect that net product sales will become a critical accounting estimate.

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Results of Operations

Comparison of the Three Months Ended June 30, ~~2019~~2020 and ~~2018~~2019

The following table summarizes our results of operations for the three months ended June 30, ~~2019~~2020 and ~~2018:~~2019:


	Three Months Ended June 30,						Three Months Ended June 30,
	2019		2018		Change		2020		2019		Change

	(unaudited, in thousands)						(unaudited, in thousands)
Revenue:
Product sales, net							$	609	$	—	$	609
Collaboration revenue	$	982	$	—	$	982		211,627		982		210,645
Operating Expenses:
Cost of goods sold								398		—		398
Research and development		42,788		39,524		3,264		34,987		42,788		(7,801)
General and administrative		13,492		6,956		6,536
Loss from operations		(55,298)		(46,480)		(8,818)
Selling, general and administrative								47,681		13,492		34,189
Income (loss) from operations								129,170		(55,298)		184,468
Interest expense								(4,640)		—		(4,640)
Other income, net		1,077		750		327		81		1,077		(996)
Net loss	$	(54,221)	$	(45,730)	$	(8,491)
Net income (loss)							$	124,611	$	(54,221)	$	178,832

Product sales, net

Product sales, net for the three months ended June 30, 2020 was $0.6 million relating to our sales of NEXLETOL and NEXLIZET. NEXLIZET was commercially available in the U.S. on June 4, 2020.

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Collaboration Revenue

Collaboration revenue recognized ~~from our collaboration agreement with DSE~~for the three months ended June 30, 2020 was $211.6 million compared to $1.0 million for the three months ended June 30, 2019, an increase of $210.6 million. The increase in collaboration revenue was ~~$1.0 million. Revenue was attributable to the ongoing performance obligation from our collaboration agreement signed on January 2, 2019~~primarily related to the ~~ongoing regulatory efforts~~$60.0 million upfront payment from the collaboration with Otsuka and $150.0 million of collaboration revenue from DSE related to the MAA transfer milestone.

Cost of goods sold

Cost of goods sold for the ~~MAA~~three months ended June 30, 2020 was $0.4 million, primarily related to cost of goods sold from our supply agreements with collaboration partners and our net product sales of NEXLETOL and NEXLIZET. NEXLIZET was commercially available in the ~~DSE Territory.~~U.S. on June 4, 2020.

Research and development expenses

Research and development expenses for the three months ended June 30, ~~2019,~~2020, were ~~$42.8~~$35.0 million, compared to ~~$39.5~~$42.8 million for the three months ended June 30, ~~2018, an increase~~2019, a decrease of ~~$3.3~~$7.8 million. The ~~increase~~decrease in research and development expenses was primarily attributable to ~~clinical development~~a decline in costs ~~for bempedoic acid, including costs~~related to ~~support~~ the ~~ongoing~~completion of enrollment of our CLEAR CVOT, ~~as we approach full enrollment in~~which was fully enrolled during the ~~study, commercial product manufacturing supply as we approach anticipated approval, and increases in our headcount and stock-based compensation expense.~~third quarter of 2019.

~~General~~Selling, general and administrative expenses

~~General~~Selling, general and administrative expenses for the three months ended June 30, ~~2019,~~2020, were ~~$13.5~~$47.7 million, compared to ~~$7.0~~$13.5 million for the three months ended June 30, ~~2018,~~2019, an increase of ~~$6.5~~$34.2 million. The increase in selling, general and administrative expenses was primarily attributable to costs to support ~~public company operations, including costs to support pre-commercialization activities, further~~the commercialization of NEXLETOL and NEXLIZET in the U.S., increases in our headcount ~~and~~resulting from the buildout of our approximately 300-member customer-facing team, stock-based compensation expense, and other costs to support our growth.

Interest Expense

Interest expense for the three months ended June 30, 2020, was $4.6 million. Interest expense was related to our RIPA with Oberland, which was entered into on June 26, 2019.

Other income, net

Other income, net for the three months ended June 30, ~~2019,~~2020, was ~~$1.1~~$0.1 million, compared to ~~$0.8~~$1.1 million for the three months ended June 30, ~~2018. This increase was primarily~~2019, a decrease of $1.0 million. The decrease is related to ~~an increase in~~lower interest income ~~earned~~ on our ~~cash, cash equivalents and investment securities.~~investments due to lower interest rates.

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Comparison of the Six Months Ended June 30, ~~2019~~2020 and ~~2018~~2019

The following table summarizes our results of operations for the six months ended June 30, ~~2019~~2020 and ~~2018:~~2019:


	Six Months Ended June 30,						Six Months Ended June 30,
	2019		2018		Change		2020		2019		Change

	(unaudited, in thousands)						(unaudited, in thousands)
Revenue:
Product sales, net							$	1,467	$	—	$	1,467
Collaboration revenue	$	146,401	$	—	$	146,401		212,609		146,401		66,208
Operating Expenses:
Cost of goods sold								429		—		429
Research and development		89,096		80,464		8,632		69,689		89,096		(19,407)
General and administrative		25,674		12,910		12,764
Income (loss) from operations		31,631		(93,374)		125,005
Selling, general and administrative								89,234		25,674		63,560
Income from operations								54,724		31,631		23,093
Interest expense								(8,811)		—		(8,811)
Other income, net		1,527		1,514		13		449		1,527		(1,078)
Net income (loss)	$	33,158	$	(91,860)	$	125,018
Net income							$	46,362	$	33,158	$	13,204

Product sales, net

Product sales, net for the six months ended June 30, 2020 was $1.5 million relating to our net product sales for NEXLETOL and NEXLIZET. NEXLETOL was commercially available in the U.S. on March 30, 2020 and NEXLIZET was commercially available in the U.S. on June 4, 2020.

Collaboration Revenue

Collaboration revenue recognized from our collaboration ~~agreement with DSE~~agreements for the six months ended June 30, 2020 was $212.6 million compared to $146.4 million for the six months ended June 30, 2019, ~~was $146.4~~an increase of $66.2 million. Revenue for the six months ended June 30, 2020 was primarily attributable to $150.0 million for the milestone related to the MAA transfer to DSE and the $60.0 million for the upfront payment in the Otsuka collaboration agreement signed on April 17, 2020. Revenue for the six months ended June 30, 2019 was attributable to the initial recognition of the upfront payment from our DSE collaboration agreement signed on January 2, ~~2019 and the ongoing performance obligation from the ongoing regulatory efforts~~2019.

Cost of goods sold

Cost of goods sold for the ~~MAA in the DSE Territory.~~six months ended June 30, 2020 was $0.4 million, primarily related cost of goods sold from our supply agreements with collaboration partners and our net product sales of NEXLETOL and NEXLIZET.

Research and development expenses

Research and development expenses for the six months ended June 30, ~~2019,~~2020, were ~~$89.1~~$69.7 million, compared to ~~$80.5~~$89.1 million for the six months ended June 30, ~~2018, an increase~~2019, a decrease of ~~$8.6~~$19.4 million. The ~~increase~~decrease in research and development expenses was primarily attributable to ~~clinical development~~a decline in costs ~~for bempedoic acid, including costs~~related to ~~support~~ the ~~ongoing~~completion of enrollment of our CLEAR CVOT, ~~as we approach full enrollment~~which was fully enrolled during the third quarter of 2019, and a decline in ~~the study, commercial product manufacturing supply as we approach anticipated approval,~~costs related to our regulatory ~~submissions and increases~~submission activities completed in ~~our headcount and stock-based compensation expense.~~2019.

~~General~~Selling, general and administrative expenses

~~General~~Selling, general and administrative expenses for the six months ended June 30, ~~2019,~~2020, were ~~$25.7~~$89.2 million, compared to ~~$12.9~~$25.7 million for the six months ended June 30, ~~2018,~~2019, an increase of ~~$12.8~~approximately $63.5 million. The increase in selling, general and administrative expenses was primarily attributable to costs to support ~~public company operations, including costs to support pre-commercialization activities, further~~the commercialization of NEXLETOL and NEXLIZET in the U.S., increases in our headcount ~~and~~resulting from the buildout of our approximately 300-member customer-facing team, stock-based compensation expense, and other costs to support our growth.

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Interest Expense

Interest expense for the six months ended June 30, 2020, was $8.8 million. Interest expense was related to our RIPA with Oberland.

Other income, net

Other income, net for the six months ended June 30, 2020, was $0.4 million, compared to $1.5 million for the six months ended June 30, 2019, ~~and 2018 was $1.5~~a decrease of $1.1 million. The decrease is related to lower interest income on our investments due to lower interest rates.

Liquidity and Capital Resources

We have funded our operations to date primarily through proceeds from sales of preferred stock, convertible promissory notes and warrants, public offerings of common stock, the incurrence of indebtedness, milestone payments from collaboration agreements and revenue interest purchase agreements. Pursuant to the license and collaboration agreement with DSE signed on January 2, 2019, we received an upfront cash payment of $150.0 million from DSE and a cash payment of $150.0 million upon the MAA transfer in June 2020 and are eligible for substantial additional sales and regulatory milestone payments and royalties. Pursuant to the RIPA with Oberland, ~~Capital LLC,~~ we received an upfront cash payment of $124.4 million, net of issuance costs, and ~~are eligible for~~received an additional $25.0 million upon ~~certain~~ regulatory approval of ~~our product candidates and~~NEXLETOL. We are eligible for an additional $50.0 million at our option upon reaching certain net product sales thresholds. In return, Oberland will have a right to receive revenue interests based on net

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product sales of our ~~product candidates. To date,~~products. Pursuant to the license and collaboration agreement with Otsuka signed on April 17, 2020, we ~~have not generated any revenue from product~~received an upfront cash payment of $60.0 million in April 2020 and are eligible for substantial additional development and sales milestone payments and weroyalties. We anticipate that we will incur losses for the foreseeable future.

As of June 30, ~~2019,~~2020, our primary sources of liquidity were our cash and cash equivalents and available-for-sale investments, which totaled ~~$274.3~~ $298.5 million and ~~$26.9~~ $2.2 million, respectively. We invest our cash equivalents and investments in highly liquid, interest-bearing investment-grade and government securities to preserve principal.

The following table summarizes the primary sources and uses of cash for the periods presented below:


	Six Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2020		2019

	(in thousands)				(in thousands)
Cash provided by (used in) operating activities	$	37,682	$	(82,419)
Cash provided by operating activities					$	70,044	$	37,682
Cash provided by investing activities		72,412		61,853		31,699		72,412
Cash provided by financing activities		128,205		10,478		29,688		128,205
Net increase (decrease) in cash and cash equivalents	$	238,299	$	(10,088)
Net increase in cash and cash equivalents					$	131,431	$	238,299

Operating Activities

We have incurred and expect to continue to incur, significant costs inrelated to the ~~areas~~commercialization of NEXLETOL and NEXLIZET and related to ongoing research and development, regulatory and other clinical study costs associated with the development of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet and our operations.~~tablets.

Net cash provided by operating activities totaled $70.0 million for the six months ended June 30, 2020, consisting of the $150.0 million milestone for the MAA transfer from our collaboration agreement with DSE, $60.0 million from the Otsuka collaboration agreement and net product sales of NEXLETOL and NEXLIZET offset by cash used to fund the commercialization activities of NEXLETOL and NEXLIZET and the research and development costs related to bempedoic acid and the bempedoic acid / ezetimibe combination tablets, adjusted for non-cash expenses such as stock-based compensation expense, interest expense related to our RIPA with Oberland, depreciation and amortization and changes in working capital. Net cash provided by operating activities totaled $37.7 million for the six months ended June 30, 2019, consisting of the $150.0 million upfront payment from the DSE collaboration offset by cash used to fund the development of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet, adjusted for non-cash expenses such as stock-based compensation expense, depreciation and amortization and changes in working capital.~~Net cash used in operating activities totaled $82.4 million for the six months ended June 30, 2018. The primary use of our cash for the six months ended June 30, 2018 was to fund the development of bempedoic acid and the bempedoic acid / ezetimibe combination tablet,tablets, adjusted for non-cash expenses such as stock-based compensation expense, depreciation and amortization and changes in working capital.

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Investing Activities

Net cash provided by investing activities of ~~$72.4~~$31.7 million and ~~$61.9~~$72.4 million for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, consisted primarily of proceeds from the sale and maturities of highly liquid, interest-bearing investment-grade and government securities.

Financing Activities

Net cash provided by financing activities of $29.7 million for the six months ended June 30, 2020 related primarily to the cash received from the RIPA with Oberland upon regulatory approval of NEXLETOL. Net cash provided by financing activities of $128.2 million for the six months ended June 30, 2019 related primarily to the upfront cash received from the RIPA with Oberland. ~~Net cash provided by financing activities of $10.5 million for the six months ended June 30, 2018 related primarily to proceeds from exercise of our common stock options.~~

Plan of Operations and Funding Requirements

We expect to continue to incur significant expenses and operating losses for the foreseeable future in connection with our ongoing CLEAR Outcomes CVOT ~~NDA and MAA submissions~~ and commercial launch ~~activities.~~activities associated with NEXLETOL and NEXLIZET in the U.S. Pursuant to the license and collaboration agreement with DSE, we received an upfront cash payment of $150.0 million from DSE in the first quarter of 2019, $150.0 million in June 2020 upon transfer to DSE of MMA for NUSTENDI and are eligible for substantial additional sales and regulatory milestone payments and ~~royalties, including an additional $150.0 million upon first commercial sale in the DSE Territory.~~royalties. Pursuant to the RIPA with Oberland, we received an upfront cash payment of $125.0 million and ~~may be~~received $25.0 million upon regulatory approval of NEXLETOL. We are eligible for an additional ~~$25.0 million upon certain regulatory approval of our product candidates and~~ $50.0 million at our option upon reaching certain net product sales thresholds. In

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return, Oberland will have a right to receive revenue ~~interests~~interest payments from us based on net product sales of certain of our products. Pursuant to the license and collaboration agreement with Otsuka, we received an upfront cash payment of $60.0 million from Otsuka in April 2020 and are eligible for substantial additional development and sales milestone payments and royalties. We estimate that current cash resources and proceeds to be received in the future for product sales, under the DSE and Otsuka collaboration ~~agreement~~agreements and the RIPA with Oberland are sufficient to fund operations through the ~~expected approvals of bempedoic acid and the bempedoic acid / ezetimibe combination tablet and the~~ commercialization of ~~bempedoic acid~~NEXLETOL and the bempedoic acid / ezetimibe combination tablet, if approved for an LDL-C lowering indication. We may, however, need to secure additional cash resources to continue to fund the commercialization and further development of bempedoic acid and the bempedoic acid / ezetimibe combination tablet.NEXLIZET. We have based these estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. We may need to secure additional cash resources to continue to fund the commercialization and further development of bempedoic acid and the bempedoic acid / ezetimibe combination tablets. Because of the numerous risks and uncertainties associated with the development and commercialization of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet~~tablets and the extent to which we entered and may enter into collaborations with pharmaceutical partners regarding the development and commercialization of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet,~~tablets, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the development and commercialization of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet.~~tablets. Our future funding requirements will depend on many factors, including, but not limited to:

●

our ability to successfully develop and commercialize ~~bempedoic acid~~NEXLETOL and ~~the bempedoic acid / ezetimibe combination tablet~~NEXLIZET or other product candidates;

●

the costs, timing and outcomes of our CLEAR Outcomes CVOT and other ongoing clinical studies of bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet;~~tablets;

●

the time and cost necessary to obtain regulatory approvals for bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet, if at all;~~tablets in other territories outside the U.S. and Europe;

●

~~our ability to establish a sales, marketing and distribution infrastructure to commercialize bempedoic acid and the bempedoic acid / ezetimibe combination tablet or~~ our ability to establish any future collaboration or commercialization arrangements on favorable terms, if at all;

●

our ability to realize the intended benefits of our existing and future collaboration and partnerships;

●

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and

●

the implementation of operational and financial information technology.

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Until such time, if ever, as we can generate U.S. substantial product ~~revenues,~~sales, we expect to finance our cash needs through a combination of collaborations with third parties, strategic alliances, licensing arrangements, permitted debt financings, permitted royalty-based financings and equity offerings or other sources. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available and permitted under the terms of our RIPA, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners or royalty-based financing arrangements, such as the collaboration ~~arrangement~~arrangements with DSE and Otsuka and the RIPA with Oberland, we may have to relinquish valuable rights to our technologies, future revenue streams or grant licenses on terms that may not be favorable to us. For instance, as part of the RIPA with Oberland, Oberland has the right to receive certain revenue interests from us based on the net sales of certain products, ~~once approved,~~ and we have granted Oberland a senior security interest in certain of our assets. If our cash flows and capital resources are insufficient to allow us to make required payments, we may have to reduce or delay capital expenditures, sell assets or seek additional capital. If we raise funds by selling additional equity, such sale would result in dilution to our stockholders. If we are unable to raise additional funds through equity or permitted debt financings or through collaborations, strategic alliances or licensing arrangements or permitted royalty-based financing arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future

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commercialization efforts or grant rights to develop and market bempedoic acid and the bempedoic acid / ezetimibe combination ~~tablet~~tablets that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Commitments

On June 26, 2019, we entered into a RIPA with Oberland. Pursuant to the RIPA, Oberland paid us $125.0 million at closing, less certain ~~transaction expenses,~~issuance costs, and, subject to the terms and conditions of the RIPA, we received $25.0 million in March 2020 upon regulatory approval of NEXLETOL. We are eligible for an additional ~~$25.0 million upon certain regulatory approval of our product candidates and~~ $50.0 million at our option upon reaching certain product sales thresholds. As consideration for the payments, Oberland has the right to receive certain revenue interests from us based on the net product sales of certain products, ~~once approved,~~ which will be tiered payments initially ranging from 2.5% to 7.5% of our net product sales in the covered territory (as detailed in the RIPA). The initial mid-single digit repayment rate on U.S. revenue steps down to less than one percent rate upon certain revenue achievements. Esperion reacquires 100% revenue rights upon repayment completion. We recorded the proceeds from the RIPA as a liability on the ~~consolidated~~condensed balance sheets and are accounting for the RIPA under the effective-interest method over the estimated life of the RIPA. Per the terms of the agreement, every $100 million of net sales generated, less than or equal to $250 million in an annual aggregate, would result in a repayment obligation of approximately $7.5 million at the stated repayment rate in the first year. In the future, as net sales thresholds set forth in the agreement are met and the repayment percentage rate changes, the amount of the obligation and timing of payment is likely to change. A significant increase or decrease in net sales will materially impact the revenue interest liability, interest expense and the time period for repayment. Refer to Note 8 “Liability Related to the Revenue Interest Purchase Agreement” in the Notes to the Condensed Financial Statements for further information.

We have entered into a contract manufacturing agreement with a third party commercial manufacturing organization for the production of certain inventory supplies of NEXLETOL and NEXLIZET. The agreement has an initial term of three years and will renew automatically for successive periods of one year each unless terminated by either party. Under the agreement we are obligated to purchase minimum order commitments on a rolling twelve-month period for the batches of inventory supplies produced.

There have been no other material changes to our contractual obligations and commitments outside the ordinary course of business from those previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019.

Off-Balance Sheet Arrangements

We do not currently have, nor did we have during the periods presented, any off-balance sheet arrangements as defined by Securities and Exchange Commission rules.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~We had cash~~There have been no material changes with respect to the information appearing in Part II, Item 7A, “Quantitative and ~~cash equivalents and available-for-sale investments of approximately $274.3 million and $26.9 million at June 30, 2019, and $37.0 million and $99.3 million at~~Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, respectively. The primary objectives of our investment activities are to preserve principal, provide liquidity and maximize income without significantly increasing risk. Our primary exposure to market risk relates to fluctuations in interest rates which are affected by changes in the general level of U.S. interest rates. Given the short-term nature of our cash and cash equivalents, we believe that a sudden change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operation. We do not have any foreign currency or other derivative financial instruments.

We do not believe that our cash, cash equivalents and available-for-sale investments have significant risk of default or illiquidity. While we believe our cash and cash equivalents do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits.

We contract with CROs and investigational sites globally. We are therefore subject to fluctuations in foreign currency rates in connection with these agreements. We do not hedge our foreign currency exchange rate risk. We do not believe that fluctuations in foreign currency rates have had a material effect on our results of operations during the six months ended June 30, 2019.

Inflation generally affects us by increasing our cost of labor and clinical study costs. We do not believe that inflation has had a material effect on our results of operations during the six months ended June 30, 2019.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities and Exchange Act of 1934 is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our President and Chief Executive Officer, who is our principal executive officer, and our Chief Financial Officer, who is our principal financial officer, to allow timely decisions regarding required disclosure.

As of June 30, ~~2019,~~2020, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of June 30, ~~2019,~~2020, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

~~There were no changes to~~During the three months ended June 30, 2020, in connection with the approval of NEXLETOL and NEXLIZET and commercial availability of NEXLETOL, we implemented new procedures and controls around our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.net product sales and inventory processes.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

~~On January 12, 2016, a purported stockholder of~~The information required with respect to this item can be found under “Commitments and Contingencies” in Note 5 to our ~~company filed a putative class action lawsuit in the United States District Court for the Eastern District of Michigan, against us and Tim Mayleben, captioned~~ ~~Kevin L. Dougherty v. Esperion Therapeutics, Inc., et al.~~ (No. 16-cv-10089). The lawsuit alleges that we and Mr. Mayleben violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by allegedly failing to disclose in an August 17, 2015, public statement that the FDA would require a cardiovascular outcomes trial before approving our lead product candidate. The lawsuit seeks, among other things, compensatory damages in connection with an allegedly inflated stock price between August 18, 2015, and September 28, 2015, as well as attorneys’ fees and costs. On May 20, 2016, an amended complaint was filed in the lawsuit and on July 5, 2016, we filed a motion to dismiss the amended complaint. On December 27, 2016, the court granted our motion to dismiss with prejudice and entered judgment in our favor. On January 24, 2017, the plaintiffscondensed financial statements included elsewhere in this ~~lawsuit filed a motion to alter or amend the judgment.~~ ~~In May 2017, the court denied the plaintiff’s motion to alter or amend the judgment. On June 19, 2017, the plaintiffs filed a notice of appeal to the Sixth Circuit Court of Appeals~~Form 10-Q and ~~on September 14, 2017, they filed their opening brief in support of the appeal.~~ ~~The appeal was fully briefed on December 7, 2017, and it was argued before the Sixth Circuit on March 15, 2018.~~On September 27, 2018, the Sixth Circuit issued an opinion in which it reversed the district court’s dismissal and remanded for further proceedings. On October 11, 2018, we filed a petition for rehearing en banc and, on October 23, 2018, the Sixth Circuit of Appeals directed plantiffs to respond to that petition. On December 3, 2018, the Sixth Circuit denied our petition for en banc rehearing, and on December 11, 2018, the case was returned to the federal district courtis incorporated by mandate from the Sixth Circuit. On December 26, 2018, we filed our answer to the amended complaint, and on March 28, 2019, we filed our amended answer to the amended complaint. We are unable to predict the outcome ofreference into this ~~matter and are unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome.~~

On December 15, 2016, a purported stockholder of our company filed a derivative lawsuit in the Court of Chancery of the State of Delaware against Tim Mayleben, Roger Newton, Mary McGowan, Nicole Vitullo, Dov

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Goldstein, Daniel Janney, Antonio Gotto Jr., Mark McGovern, Gilbert Omenn, Scott Braunstein, and Patrick Enright. Our company is named as a nominal defendant. The lawsuit alleges that the defendants breached their fiduciary duties to the company when they made or approved improper statements on August 17, 2015, regarding our lead product candidate’s path to FDA approval, and failed to ensure that reliable systems of internal controls were in place at our company. On February 8, 2019, we and the defendants filed a motion to dismiss the derivative lawsuit. On April 23, 2019, the plaintiff filed an opposition to the motion to dismiss the derivative lawsuit, and we filed a reply brief on May 15, 2019. The lawsuit seeks, among other things, any damages sustained by us as a result of the defendants’ alleged breaches of fiduciary duties, including damages related to the above-referenced securities class action, an order directing us to take all necessary actions to reform and improve our corporate governance and internal procedures, restitution from the defendants, and attorneys’ fees and costs. We are unable to predict the outcome of this matter and are unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome.

~~On May 7, 2018, a purported stockholder of our company filed a putative class action lawsuit in the United States District Court for the Eastern District of Michigan, captioned~~ ~~Kevin Bailey v. Esperion Therapeutics, Inc., et al. (No. 18-cv-11438~~). An amended complaint was filed on October 22, 2018, against us and certain directors and officers. The amended complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 based on allegedly making false and misleading statements ~~and omissions about the safety and tolerability of bempedoic acid, and specifically~~ ~~facts and circumstances surrounding the Phase 3 trial results for bempedoic acid that we announced on May 2, 2018.~~ ~~On November 13, 2018, we filed a motion to dismiss the amended complaint, and that motion was fully briefed on December 18, 2018.~~ ~~The lawsuit sought, among other things, compensatory damages in connection with an allegedly inflated stock price between February 22, 2017, and May 22, 2018, as well as attorneys’ fees and costs.~~ ~~On February 19, 2019, the court granted our motion to dismiss with prejudice and entered judgment in our favor.~~

There have been no other material changes to our legal proceedings outside the ordinary course of business from those previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.Item 1.

In the future, we may become party to legal matters and claims arising in the ordinary course of business, the resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows.

Item 1A. Risk Factors

Except for the historical information contained herein or incorporated by reference, this report and the information incorporated by reference contains forward-looking statements that involve risks and uncertainties. These statements include projections about our accounting and finances, plans and objectives for the future, future operating and economic performance and other statements regarding future performance. These statements are not guarantees of future performance or events. Our actual results could differ materially from those discussed in this report. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in ~~the following section, as well as those discussed in~~ Part I, Item 2 entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere throughout this report and in any documents incorporated in this report by reference.

You should consider carefully the following risk factors, together with those set forth in Part I, Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019 and in all of the other information included or incorporated in this ~~report and other filings that we make with the Securities and Exchange Commission.~~report. The following risk factors represent new risk factors or those containing changes, including material changes, to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019. If any of the previously identified or following risks, either alone or taken together, or other risks not presently known to us or that we currently believe to not be significant, develop into actual events, then our business, financial condition, results of operations or prospects could be materially adversely affected. If that happens, the market price of our common stock could decline, and stockholders may lose all or part of their investment.

The outbreak of the novel strain of coronavirus, SARS-CoV-2, or similar public health crises, could have a material adverse impact on our business, financial condition and results of operations, including our commercial launch of NEXLETOL and NEXLIZET, our intended commercial launch of NILEMDO and NUSTENDI lead by DSE in the EU, our ongoing CLEAR Outcomes trial, and operations and sales in general.

In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 (COVID-19), surfaced in Wuhan, China. Since then, SARS-CoV-2 and COVID-19 have spread to multiple countries, including the United States. The COVID-19 pandemic is evolving, and to date has led to the implementation of various responses, including government-imposed quarantines, travel restrictions and other public health safety measures. In response to the spread of SARS-CoV-2 and COVID-19, our commercial and medical organizations are following internal guidelines and respective state guidelines when interacting with physicians and customers.

As a result of the COVID-19 outbreak, or similar pandemics, we may experience disruptions that could severely impact our business, including our clinical development and commercialization plans for the bempedoic acid and bempedoic acid / ezetimibe fixed dose combination tablets. As a result of the current pandemic, or future pandemics, we may not be able to meet expectations with respect to the net product sales of NEXLETOL, NEXLIZET, NILEMDO and NUSTENDI or attain or maintain profitability and positive cash-flow from operations. Our ongoing clinical trial for bempedoic acid tablet and the timing for the review and approval of expanded indications for their effect on cardiovascular events may be impacted as well. Business interruptions from the current or future pandemics may also adversely impact the third parties we solely rely on to sufficiently manufacture NEXLETOL, NEXLIZET, NILEMDO and NUSTENDI and to produce our product candidates in quantities we require, which may impair the commercialization of NEXLETOL, NEXLIZET, NILEMDO and NUSTENDI and our research and development activities. So far, most of our manufacturing partners and CROs have continued to produce at anticipated levels despite these challenges.

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~~Risks Related~~Some factors from the COVID-19 outbreak that may delay or otherwise adversely affect our business generally, and the third parties which we rely upon, include business disruptions caused by potential workplace, laboratory and office closures and an increased reliance on employees working from home, disruptions to ~~the Securities Markets~~or delays in ongoing laboratory experiments and ~~Investment in~~operations, staffing shortages, travel limitations or mass transit disruptions, any of which could adversely impact our ~~Common Stock~~business operations or delay necessary interactions with local regulators, ethics committees and other important agencies and contractors.

~~We may~~The COVID-19 outbreak continues to rapidly evolve. The extent to which the outbreak impacts our business, including our commercial results and clinical trials will depend on future developments, which are highly uncertain and cannot be ~~at an increased risk~~predicted with confidence, such as the ultimate geographic spread of ~~securities class action litigation.~~

~~Historically, securities class action litigation has often been brought against a company following a decline~~the disease, the duration of the outbreak, travel restrictions and actions to contain the outbreak or treat its impact, such as social distancing and quarantines or lock-downs in the ~~market price of its securities. This risk is especially relevant for us because biotechnology~~United States and pharmaceutical companies have experienced significant stock price volatility in recent years. For example, a purported securities class action lawsuit was filed in January 2016 naming us and certain of our officers as defendants. In December 2016, the federal district court granted our motion to dismiss with prejudice and entered judgment in our favor. In May 2017, the court denied plaintiffs' motion to alter or amend that judgment. On June 19, 2017, plaintiffs filed a notice of appeal to the Sixth Circuit Court of Appeals and on September 14, 2017, they filed their opening brief in support of the appeal. The appeal was fully briefed on December 7, 2017, and it was argued before the Sixth Circuit on March 15, 2018. On September 27, 2018, the Sixth Circuit issued an opinion in which it reversed the district court’s dismissal and remanded for further proceedings. On October 11, 2018, we filed a petition for rehearing en banc and, on October 23, 2018, the Sixth Circuit Court of Appeals directed plaintiffs to respond to that petition. On December 3, 2018, the Sixth Circuit Court of Appeals denied our petition for en banc rehearing, and on December 11, 2018, the case was returned to the federal district court by mandate from the Sixth Circuit. On December 26, 2018, we filed our answer to the amended complaint, and on March 28, 2019, we filed our amended answer to the amended complaint.

Additionally, in December 2016, a purported derivative action was filed in Delaware against certain of our directors and officers. In February 2019, our company and defendants filed a motion to dismiss the derivative lawsuit. In April 2019, the plaintiff filed an opposition to the motion to dismiss the derivative lawsuit, and we filed a reply brief in May 2019. In May 2018, a purported securities class action lawsuit was filed naming us and certain of our officers as defendants. In November 2018, we filed a motion to dismiss and such motion was fully briefed in December 2018. In February 2019, the court granted our motion to dismiss with prejudice and entered judgment in our favor.

Any lawsuit to which we or our directors or officers are a party, with or without merit, may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms. Any such negative outcome could result in payments of substantial damages or fines, damage to our reputation or adverse changes to our offeringsother countries, business closures or business practices. Any of these results could adversely affect our business. In addition, defending claims is costly and can impose a significant burden on our management. This proceeding and any others in which we may become involved could result in substantial costs and a diversion of management's attention and resources, which could harm our business.

Our payment obligations under the Revenue Interest Purchase Agreement with Oberland may adversely affect our financial position or results of operations and our ability to raise additional capital which in turn may increase our vulnerability to adverse regulatory developments or economic or business downturns.

As described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources,” on June 26, 2019, we entered into a Revenue Interest Purchase Agreement, or RIPA, with Eiger II SA LLC, or Oberland, an affiliate of Oberland Capital LLC,disruptions and the ~~Purchasers named therein. Pursuant to the RIPA, Oberland paid us $125.0 million on closing, less certain transaction expenses, and, subject to the terms and conditions~~effectiveness of actions taken in the ~~RIPA, we are eligible for an additional $25.0 million upon certain regulatory approval of our product candidates~~United States and ~~$50.0 million at our option upon reaching certain sales thresholds. As consideration for~~other countries to contain and treat the payments, Oberland has the right to receive certain revenue interests from us based on the net sales of certain products, once approved, which will be tiered payments initially ranging from 2.5% to 7.5% of our net sales in the covered territory.

The RIPA and the revenue interest stream payable to Oberland could have important negative consequences to the holders of our securities. For example, a portion of our cash flow from operations will be needed to pay certain revenue interests to Oberland and will not be available to fund future operations. Additionally, we may have increased vulnerability to adverse general economic and industry conditions.

Payment requirements under the RIPA will increase our cash outflows. Our future operating performance is subject to market conditions and business factors that are beyond our control. If our cash inflows and capital resources

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are insufficient to allow us to make required payments, we may have to reduce or delay capital expenditures, sell assets or seek additional capital. If we raise funds by selling additional equity, such sale would result in dilution to our stockholders. There is no assurance that if we are required to secure funding we can do so on terms acceptable to us, or at all. Failure to pay certain amounts to Oberland when due would result in a default under the RIPA and result in foreclosure on certain of our assets which would have a material adverse effect.

The RIPA contains customary affirmative and negative non-financial covenants and events of default, including, covenants and restrictions that among other things, grant a senior security interest in our assets and restrict our ability to incur liens, incur additional indebtedness, make loans and investments, engage in mergers and acquisitions, and engage in asset sales. Additionally, the Purchasers under the RIPA have an option (the “Put Option”) to terminate the RIPA and to require the Company to repurchase future Revenue Interests upon enumerated events such as a bankruptcy event, an uncured material breach, a material adverse effect (which can include adverse developments related to the regulatory approval of our product candidates) or a change of control. The triggering of the Put Option, including by our failure to comply with these covenants, could permit the Purchasers to declare certain amounts to be immediately due and payable. If we default under the terms of the RIPA, including by failure to make such accelerated payments, the Purchasers take control of our pledged assets. Further, if we are liquidated, the Purchasers’ right to repayment would be senior to the rights of the holders of our common stock. Any triggering of the Put Option or other declaration by the Purchasers of an event of default under the RIPA could significantly harm our financial condition, business and prospects and could cause the price of our common stock to decline.disease.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 6. Exhibits

The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which Exhibit Index is incorporated herein by reference.

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EXHIBIT INDEX

Incorporated by Reference to:
Exhibit
No.

Description

Form or
Schedule

Exhibit
No.

Filing
Date with
SEC

SEC File
Number

3.1

Amended and Restated Certificate of Incorporation of the Registrant.

S-1/A

3.2

6/12/2013

333-188595

3.2

Amended and Restated By-Laws of the Registrant.

S-1/A

3.4

6/12/2013

333-188595

4.1

Specimen Common Stock Certificate of the Registrant.

S-1/A

4.1

6/12/2013

333-188595

10.1

Revenue Interest Purchase Agreement by and between the Company, Eiger III SA LLC, and the Purchasers named therein, dated June 26, 2019.

8-K

10.1

6/26/2019

001-35986

31.1*

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1⁺

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

The following financial information from our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed with the SEC on August 8, 2019, formatted in Inline Extensible Business Reporting Language (iXBRL): (1) the Condensed Balance Sheets at June 30, 2019 and December 31, 2018, (2) the Condensed Statements of Operations and Comprehensive Income (Loss) for the three and six month periods ended June 30, 2019 and 2018, (3) the Condensed Statements of Stockholders’ Equity for the three and six month periods ended June 30, 2019 and 2018, (4) the Condensed Statements of Cash Flows for the six month periods ended June 30, 2019 and 2018, and (5) the Notes to Condensed Financial Statements.

		Incorporated by Reference to:
Exhibit No.	Description	Form or Schedule	Exhibit No.	Filing Date with SEC	SEC File Number

10.1*	Esperion Therapeutics, Inc. 2020 Employee Stock Purchase Plan, as amended

10.2*†	License and Collaboration Agreement by and between the Registrant and Otsuka Pharmaceutical Co., Ltd. dated April 17, 2020

10.3*†	1^st Amendment to the License and Collaboration Agreement by and between the Registrant and Daiichi Sankyo Europe GMBH dated June 18, 2020

31.1*	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1+	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.SCH*	Inline XBRL Taxonomy Extension Schema Document

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document

104*	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

* Filed herewith.

+ The certification furnished in Exhibit 32.1 hereto is deemed to be furnished with this Quarterly Report on Form 10-Q and will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.

† Portions of this exhibit have been omitted because they are both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ESPERION THERAPEUTICS, INC.


August ~~8, 2019~~10, 2020	By:	/s/ Tim M. Mayleben
		Tim M. Mayleben
		President and Chief Executive Officer
		(Principal Executive Officer)

August ~~8, 2019~~10, 2020	By:	/s/ Richard B. Bartram
		Richard B. Bartram
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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	(in thousands)
2019	$	136
2020		275
2021		259
2022		260
2023		216
Total lease payments		1,146
Less imputed interest		188
Total	$	958


Operating Leases	(in thousands)
Right of use operating lease assets (short-term)	$	198
Right of use operating lease assets (long-term)		734
Total right of use operating lease assets	$	932

Operating lease liabilities (short-term)	$	199
Operating lease liabilities (long-term)		759
Total lease obligations under operating leases	$	958