UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| (Mark One) | ||
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended: September 30, 2003 | ||
| OR | ||
| [ ] | 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: 001-16033
ESPERION THERAPEUTICS, INC.
| Delaware | 38-3419139 | |
| (State of incorporation) | (IRS Employer Identification No.) |
3621 S. State Street
695 KMS Place
Ann Arbor, MI 48108
(734) 332-0506
(Address of principal executive offices, including zip
code, and telephone number, including area code)
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.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
The number of outstanding shares of the registrant’s common stock, as of October 23, 2003, was 34,081,648.
ESPERION THERAPEUTICS, INC.
FORM 10-Q
TABLE OF CONTENTS
| Page | ||||||
PART I - FINANCIAL INFORMATION |
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Item 1. Financial Statements |
||||||
Condensed Consolidated Balance Sheets as of September 30, 2003 and
December 31, 2002 |
3 | |||||
Condensed
Consolidated Statements of Operations for the Three and Nine Months
Ended September 30, 2003 and 2002, and the period
from inception to September 30, 2003 |
4 | |||||
Condensed
Consolidated Statement of Stockholders’ Equity for the
Nine Months Ended September 30, 2003 |
5 | |||||
Condensed
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2003 and 2002, and the period
from inception to September 30, 2003 |
6 | |||||
Notes to Condensed Consolidated Financial Statements |
7 | |||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations |
11 | |||||
Item 3. Quantitative and Qualitative Disclosures about Market Risk |
17 | |||||
Item 4. Controls and Procedures |
17 | |||||
PART II – OTHER INFORMATION |
||||||
Item 1. Legal Proceedings |
18 | |||||
Item 2. Changes in Securities and Use of Proceeds |
18 | |||||
Item 3. Defaults Upon Senior Securities |
18 | |||||
Item 4. Submission of Matters to a Vote of Security Holders |
18 | |||||
Item 5. Other Information |
18 | |||||
Item 6. Exhibits and Reports on Form 8-K |
19 | |||||
SIGNATURES |
20 | |||||
INDEX TO EXHIBITS |
21 | |||||
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||||
| in thousands | 2003 | 2002 | ||||||||
| (Unaudited) | ||||||||||
Assets: |
||||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ | 64,685 | $ | 40,499 | ||||||
Short-term investments |
27,707 | 4,354 | ||||||||
Prepaid expenses and other |
1,426 | 410 | ||||||||
Total current assets |
93,818 | 45,263 | ||||||||
Property and equipment, net |
2,498 | 3,001 | ||||||||
Goodwill |
3,108 | 3,108 | ||||||||
Deposits and other assets |
6 | 35 | ||||||||
Total assets |
$ | 99,430 | $ | 51,407 | ||||||
Liabilities and Stockholders’ Equity: |
||||||||||
Current liabilities: |
||||||||||
Current portion of long-term debt |
$ | 1,052 | $ | 1,061 | ||||||
Accounts payable |
1,110 | 1,687 | ||||||||
Accrued liabilities |
4,136 | 2,185 | ||||||||
Total current liabilities |
6,298 | 4,933 | ||||||||
Long-term debt, less current portion |
8,074 | 7,731 | ||||||||
Commitments and contingencies (Note 8)
|
||||||||||
Stockholders’ equity: |
||||||||||
Preferred stock |
— | — | ||||||||
Common stock |
34 | 29 | ||||||||
Additional paid-in capital |
201,677 | 133,411 | ||||||||
Notes receivable |
— | (3 | ) | |||||||
Accumulated deficit during the development stage |
(116,450 | ) | (94,046 | ) | ||||||
Deferred stock compensation |
(148 | ) | (589 | ) | ||||||
Accumulated other comprehensive loss |
(55 | ) | (59 | ) | ||||||
Total stockholders’ equity |
85,058 | 38,743 | ||||||||
Total liabilities and stockholders’ equity |
$ | 99,430 | $ | 51,407 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | Inception to September 30, |
||||||||||||||||||||
| in thousands, except share and per share data | 2003 | 2002 | 2003 | 2002 | 2003 | |||||||||||||||||
Operating expenses: |
||||||||||||||||||||||
Research and development |
$ | 4,473 | $ | 5,416 | $ | 16,204 | $ | 16,999 | $ | 92,652 | ||||||||||||
General and administrative |
1,748 | 1,677 | 4,938 | 4,750 | 22,054 | |||||||||||||||||
Goodwill amortization |
— | — | — | — | 1,089 | |||||||||||||||||
Purchased in-process research and development |
— | — | — | — | 4,000 | |||||||||||||||||
Total operating expenses |
6,221 | 7,093 | 21,142 | 21,749 | 119,795 | |||||||||||||||||
Loss from operations |
(6,221 | ) | (7,093 | ) | (21,142 | ) | (21,749 | ) | (119,795 | ) | ||||||||||||
Other income (expense): |
||||||||||||||||||||||
Interest income |
191 | 258 | 440 | 862 | 7,637 | |||||||||||||||||
Interest expense |
(331 | ) | (289 | ) | (960 | ) | (819 | ) | (3,345 | ) | ||||||||||||
Other, net |
(202 | ) | 144 | (742 | ) | (401 | ) | (947 | ) | |||||||||||||
Total other income (expense) |
(342 | ) | 113 | (1,262 | ) | (358 | ) | 3,345 | ||||||||||||||
Loss before income taxes |
(6,563 | ) | (6,980 | ) | (22,404 | ) | (22,107 | ) | (116,450 | ) | ||||||||||||
Provision for income taxes |
— | — | — | — | — | |||||||||||||||||
Net loss |
(6,563 | ) | (6,980 | ) | (22,404 | ) | (22,107 | ) | (116,450 | ) | ||||||||||||
Beneficial conversion feature on preferred stock |
— | — | — | — | (22,870 | ) | ||||||||||||||||
Net loss attributable to common stockholders |
($ | 6,563 | ) | ($ | 6,980 | ) | ($ | 22,404 | ) | ($ | 22,107 | ) | ($ | 139,320 | ) | |||||||
Basic and diluted net loss per share |
($ | 0.20 | ) | ($ | 0.24 | ) | ($ | 0.74 | ) | ($ | 0.76 | ) | ||||||||||
Shares used in computing basic and diluted net loss per share |
32,373,833 | 29,268,023 | 30,408,455 | 29,234,243 | ||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Accumulated | |||||||||||||||||||||||||||||
| Deficit During | |||||||||||||||||||||||||||||
| Additional | the | ||||||||||||||||||||||||||||
| Date of | Preferred | Common | Paid-In | Notes | Development | Deferred Stock | |||||||||||||||||||||||
| In thousands, except share data | Transaction | Stock | Stock | Capital | Receivable | Stage | Compensation | ||||||||||||||||||||||
Balance — December 31, 2002 |
— | $ | 29 | $ | 133,411 | ($3 | ) | ($94,046 | ) | ($589 | ) | ||||||||||||||||||
Issuance of 262,436 shares of common
stock, net, upon exercise of options and under stock purchase plan |
January
2- September 12 |
— | — | 1,358 | — | — | — | ||||||||||||||||||||||
Expense related to equity compensation |
June 30 | — | — | 69 | — | — | — | ||||||||||||||||||||||
Issuance of 4,000,000 shares of
common stock for public offering net
of $500,000 of offering expenses |
August 1 | — | 5 | 60,136 | — | — | — | ||||||||||||||||||||||
Issuance of 434,000 shares of common
stock for underwriters’
over-allotment |
August 22 | — | — | 6,579 | — | — | — | ||||||||||||||||||||||
Issuance of 6,738 shares of common
stock for employer 401(k) match |
September 15 | — | — | 124 | — | — | — | ||||||||||||||||||||||
Amortization of deferred stock
compensation |
— | — | — | — | — | 441 | |||||||||||||||||||||||
Decrease in notes receivable |
— | — | — | 3 | — | — | |||||||||||||||||||||||
Net Loss |
— | — | — | — | (22,404 | ) | — | ||||||||||||||||||||||
Unrealized gain on investments |
— | — | — | — | — | — | |||||||||||||||||||||||
Comprehensive loss |
— | — | — | — | — | — | |||||||||||||||||||||||
Balance — September 30, 2003 |
— | $ | 34 | $ | 201,677 | — | ($116,450 | ) | ($148 | ) | |||||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| Accumulated | |||||||||||||
| Other | Total | ||||||||||||
| Comprehensive | Stockholders’ | Comprehensive | |||||||||||
| In thousands, except share data | Income/(Loss) | Equity | Loss | ||||||||||
Balance — December 31, 2002 |
($59 | ) | $ | 38,743 | |||||||||
Issuance of 262,436 shares of common
stock, net, upon exercise of options and under stock purchase plan |
— | 1,358 | |||||||||||
Expense related to equity compensation |
— | 69 | |||||||||||
Issuance of 4,000,000 shares of
common stock for public offering net
of $500,000 of offering expenses |
— | 60,141 | |||||||||||
Issuance of 434,000 shares of common
stock for underwriters’
over-allotment |
— | 6,579 | |||||||||||
Issuance of 6,738 shares of common
stock for employer 401(k) match |
— | 124 | |||||||||||
Amortization of deferred stock
compensation |
— | 441 | |||||||||||
Decrease in notes receivable |
— | 3 | |||||||||||
Net Loss |
— | (22,404 | ) | ($22,404 | ) | ||||||||
Unrealized gain on investments |
4 | 4 | 4 | ||||||||||
Comprehensive loss |
4 | ($22,400 | ) | ||||||||||
Balance — September 30, 2003 |
($55 | ) | $ | 85,058 | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | Inception to | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| in thousands | 2003 | 2002 | 2003 | |||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net loss |
($22,404 | ) | ($22,107 | ) | ($116,450 | ) | ||||||||||
Adjustments to reconcile net loss to net cash
used in operating activities: |
||||||||||||||||
Purchased in-process research and development |
— | — | 4,000 | |||||||||||||
Depreciation and amortization |
872 | 1,021 | 5,685 | |||||||||||||
Stock-based compensation expense |
441 | 611 | 4,091 | |||||||||||||
Decrease in notes receivable |
3 | 9 | 126 | |||||||||||||
Loss on sale of property and equipment |
1 | 170 | 192 | |||||||||||||
Non-cash interest expense included in long-term debt |
365 | 277 | 1,152 | |||||||||||||