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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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: June 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.
(Exact name of registrant as specified in its charter)

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.

[X] Yes                       [   ] No

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

[X] Yes                       [   ] No

     The number of outstanding shares of the registrant’s common stock, as of August 8, 2003, was 33,577,270.

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ESPERION THERAPEUTICS, INC.

FORM 10-Q
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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)
CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements include the accounts of Esperion Therapeutics, Inc. (“Esperion” or the “Company”) and its subsidiaries, and have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The Company believes that all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation, have been included. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

     Operating results for the three- and six-month periods ended June 30, 2003 and 2002 are not necessarily indicative of the results for the full year.

(2) Change in Accounting Policy

     Effective April 1, 2003, the Company changed the functional currency for its foreign subsidiary from Swedish Kronor to U.S. Dollars. The change in functional currency is based on the ramp-down of the operations of its foreign subsidiary, the frequent intercompany transactions between the Company and the subsidiary, the reliance by the subsidiary on the Company to service debt costs and the limited number and amount of purchases and expenses denominated in Swedish Kronor. Additionally, the Company determined that intercompany foreign currency transactions were of a long-term investment nature, as settlement is not anticipated in the foreseeable future. The change in accounting for foreign operations results in the financial statements of Esperion AB, a Swedish subsidiary, being translated using historic exchange rates or exchange rates in effect at the end of a period for assets and liabilities of a non-monetary and monetary nature, respectively, and at average rates, during the period for results of operations. The resulting foreign currency translation adjustment, excluding the impact of long-term intercompany transactions, is reflected in other income (expense) on the accompanying condensed consolidated statements of operations. The change in accounting policy is reported prospectively from the date of change. The change resulted in a decrease in accumulated other comprehensive loss of approximately $386,000 as of June 30, 2003 on the accompanying condensed consolidated balance sheets, and an increase in other expense of approximately $386,000 on the accompanying condensed consolidated statements of operations during the three and six months ended June 30, 2003.

(3) Comprehensive Loss

     Comprehensive loss is the total of net loss and all other non-owner changes in equity. The difference between net loss, as reported in the accompanying condensed consolidated statements of operations, and comprehensive loss is the foreign currency translation adjustment for the respective periods and unrealized gain (loss) on short-term investments for the respective periods. Total comprehensive loss was $8,440,000 and $7,961,000 for the three-month periods ended June 30, 2003 and 2002, respectively, and $15,846,000 and $15,275,000, for the six-month periods ended June 30, 2003 and 2002, respectively.

(4) Stock-Based Compensation

     The Company accounts for stock-based compensation to employees using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the fair

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value of the Company’s common stock as of the date of the grant over the amount the employee must pay to acquire the stock.

     Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure” (“SFAS No. 148”) amends Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”) to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation.

     Using the intrinsic value method under APB 25, no compensation expense has been recognized in the accompanying consolidated statements of operations for options granted to employees at fair value. Had compensation expense been determined based on the fair value at the date of grant consistent with SFAS No. 123, the reported net loss would have increased to the following pro forma amounts, which may not be representative of that to be expected in future years (in thousands, except loss per share data):

     The fair value of options was estimated at the date of grant using the Black Scholes Single Option valuation method under SFAS No. 123 with the following assumptions as of June 30, 2003 and 2002, respectively: weighted-average risk free interest rate of 2.50% and 2.82%; dividend yield of 0%; volatility of 50.29% and 51.69%; and expected life of options of five years. The weighted-average fair values of options granted during the three months ended June 30, 2003 and 2002 were $6.66 and $2.37 per share, respectively. The weighted-average fair values of options granted during the six months ended June 30, 2003 and 2002 were $3.89 and $2.76 per share, respectively. Option valuation models require the input of highly subjective assumptions. Beca