2016
ANNUAL REPORT
TO OUR SHAREHOLDERS AND COLLEAGUES:
In 2016, The Lipid Management Team at Esperion focused on building
a strong foundation for the global pivotal Phase 3 LDL-cholesterol
lowering program for bempedoic acid, which the team successfully
initiated on time, including initiation of the CLEAR Outcomes
cardiovascular outcomes trial (CVOT). While small in number, our
highly-experienced, determined team made tremendous progress
over the past year advancing our two Phase 3 therapies; bempedoic
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:2)(cid:7)(cid:5)(cid:6)(cid:8)(cid:9)(cid:10)(cid:6)(cid:5)(cid:11)(cid:12)(cid:13)(cid:14)(cid:10)(cid:8)(cid:15)(cid:16)(cid:4)(cid:14)(cid:14)(cid:6)(cid:17)(cid:18)(cid:19)(cid:10)(cid:5)(cid:6)(cid:5)(cid:11)(cid:20)(cid:10)(cid:6)(cid:3)(cid:11)(cid:21)(cid:13)(cid:4)(cid:7)(cid:2)(cid:8)(cid:4)(cid:11)(cid:7)(cid:22)(cid:6)(cid:3)(cid:11)(cid:21)(cid:13)(cid:4)(cid:7)(cid:4)(cid:7)(cid:23)(cid:6)
bempedoic acid + ezetimibe (BA+EZ).
Performance excellence resulted in the achievement of several
important development program milestones this past year:
JANUARY
- Launched the global pivotal Phase 3 clinical development program
for bempedoic acid with the initiation of the long-term safety and
tolerability study (Study 1).
- Initiated a Phase 2 pharmacokinetics/pharmacodynamics
(PK/PD) clinical study (1002-035) of bempedoic acid in
patients treated with background atorvastatin 80 mg, the
most commonly prescribed high-dose statin.
- Published full results from the previously completed 1002-008
study, “Treatment with ETC-1002 alone and in combination with
ezetimibe lowers LDL-cholesterol in hypercholesterolemic
patients with or without statin intolerance,” in the Journal of
Clinical Lipidology.
FEBRUARY
- Initiated a Phase 1 clinical pharmacology study (1002-037) to
assess the safety and tolerability of bempedoic acid, as well as the
(cid:10)(cid:24)(cid:10)(cid:3)(cid:8)(cid:20)(cid:6)(cid:11)(cid:25)(cid:6)(cid:13)(cid:10)(cid:21)(cid:16)(cid:10)(cid:5)(cid:11)(cid:4)(cid:3)(cid:6)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:11)(cid:7)(cid:6)(cid:8)(cid:9)(cid:10)(cid:6)(cid:26)(cid:27)(cid:6)(cid:11)(cid:25)(cid:6)(cid:20)(cid:4)(cid:7)(cid:23)(cid:14)(cid:10)(cid:6)(cid:5)(cid:11)(cid:20)(cid:10)(cid:20)(cid:6)(cid:11)(cid:25)(cid:6)(cid:8)(cid:9)(cid:10)(cid:6)(cid:9)(cid:4)(cid:23)(cid:9)(cid:10)(cid:20)(cid:8)(cid:6)
doses of the most commonly prescribed statins.
JUNE
- Published full results from the previously completed 1002-009
(cid:20)(cid:8)(cid:12)(cid:5)(cid:28)(cid:29)(cid:6)(cid:30)(cid:31)(cid:24)(cid:10)(cid:3)(cid:8)(cid:6)(cid:11)(cid:25)(cid:6)(cid:31)!"(cid:15)#$$%(cid:6)(cid:11)(cid:7)(cid:6)&(cid:10)’(cid:12)(cid:21)(cid:6)*(cid:11)4(cid:15)<(cid:10)(cid:7)(cid:20)(cid:4)(cid:8)(cid:28)(cid:6)*(cid:4)(cid:16)(cid:11)(cid:16)’(cid:11)(cid:8)(cid:10)(cid:4)(cid:7)(cid:6)
Cholesterol in Hypercholesterolemic Patients Receiving Statin
Therapy,” in the American Journal of Cardiology.
OCTOBER
- Announced positive top-line results from the Phase 1 PK (1002-
037) and Phase 2 PK/PD study (1002-035) of bempedoic acid in
patients treated with background atorvastatin 80 mg.
NOVEMBER
- (cid:6)(cid:6)(cid:26)(cid:12)(cid:13)(cid:14)(cid:4)(cid:20)(cid:9)(cid:10)(cid:5)(cid:6)(cid:8)(cid:9)(cid:10)(cid:6)(cid:5)(cid:10)(cid:18)(cid:7)(cid:4)(cid:8)(cid:4)=(cid:10)(cid:6)(cid:16)(cid:2)(cid:16)(cid:10)’(cid:6)(cid:11)(cid:7)(cid:6)(cid:8)(cid:9)(cid:10)(cid:6)(cid:21)(cid:10)(cid:3)(cid:9)(cid:2)(cid:7)(cid:4)(cid:20)(cid:21)(cid:6)(cid:11)(cid:25)(cid:6)(cid:2)(cid:3)(cid:8)(cid:4)(cid:11)(cid:7)(cid:6)(cid:11)(cid:25)(cid:6)
bempedoic acid, inhibiting the enzyme ATP Citrate Lyase (ACL), in
the journal Nature Communications.
DECEMBER
- Launched three global pivotal Phase 3 LDL-cholesterol lowering
(cid:10)>(cid:3)(cid:2)(cid:3)(cid:28)(cid:6)(cid:20)(cid:8)(cid:12)(cid:5)(cid:4)(cid:10)(cid:20)(cid:6)(cid:2)(cid:7)(cid:5)(cid:6)(cid:8)(cid:9)(cid:10)(cid:6)Cholesterol Lowering via BEmpedoic
Acid, an ACL-inhibiting Regimen (CLEAR) Outcomes CVOT for
bempedoic acid.
As we start 2017, our Lipid Management Team continues to
deliver on important development milestones:
JANUARY
- Completed patient enrollment in the global pivotal Phase 3
long-term safety and tolerability study (Study 1) of bempedoic
acid in patients with hypercholesterolemia with over 2,200
patients enrolled several months ahead of plan.
FEBRUARY
- Launched an open-label extension study of the global pivotal
Phase 3 long-term safety and tolerability study (Study 1) with
up to 1,500 patients expected to enroll. All patients in the
open-label extension study will receive bempedoic acid.
MARCH
- Initiated a Phase 2 “triplet oral therapy” study (1002-038) of
bempedoic acid, ezetimibe and atorvastatin to further explore
the complementary LDL-cholesterol lowering and potential for
better tolerability of convenient triplet oral therapy.
- Brian A. Ference, M.D., M.Phil, M.Sc., F.A.C.C., Associate Professor
of Medicine, Wayne State University School of Medicine,
will present “Genetic Target Validation for ATP Citrate Lyase
Inhibition” at the upcoming American College
(cid:11)(cid:25)(cid:6)"(cid:2)’(cid:5)(cid:4)(cid:11)(cid:14)(cid:11)(cid:23)(cid:28)(cid:6)??(cid:8)(cid:9)(cid:6)@(cid:7)(cid:7)(cid:12)(cid:2)(cid:14)(cid:6)&(cid:3)(cid:4)(cid:10)(cid:7)(cid:8)(cid:4)(cid:18)(cid:3)(cid:6)&(cid:10)(cid:20)(cid:20)(cid:4)(cid:11)(cid:7)J(cid:6)
Your Lipid Management Team will continue to focus on performance
excellence for the rest of 2017 with the advancement of bempedoic
acid through the completion of enrollment in the three pivotal
Phase 3 LDL-cholesterol lowering studies. We will also complete
negotiations with regulatory authorities and announce the clinical
(cid:5)(cid:10)=(cid:10)(cid:14)(cid:11)(cid:16)(cid:21)(cid:10)(cid:7)(cid:8)(cid:6)(cid:16)(cid:14)(cid:2)(cid:7)(cid:6)(cid:2)(cid:7)(cid:5)(cid:6)’(cid:10)(cid:23)(cid:12)(cid:14)(cid:2)(cid:8)(cid:11)’(cid:28)(cid:6)(cid:20)(cid:8)’(cid:2)(cid:8)(cid:10)(cid:23)(cid:28)(cid:6)(cid:25)(cid:11)’(cid:6)(cid:8)(cid:9)(cid:10)(cid:6)(cid:5)(cid:11)(cid:12)(cid:13)(cid:14)(cid:10)(cid:8)(cid:15)(cid:16)(cid:4)(cid:14)(cid:14)(cid:6)(cid:17)(cid:18)(cid:19)(cid:10)(cid:5)(cid:6)
dose combination) of bempedoic acid + ezetimibe (BA+EZ) in the
second quarter.
I look forward to providing you with further updates on our team’s
continued success in advancing both bempedoic acid and our
(cid:18)(cid:19)(cid:10)(cid:5)(cid:6)(cid:5)(cid:11)(cid:20)(cid:10)(cid:6)(cid:3)(cid:11)(cid:21)(cid:13)(cid:4)(cid:7)(cid:2)(cid:8)(cid:4)(cid:11)(cid:7)(cid:6)(cid:8)(cid:9)’(cid:11)(cid:12)(cid:23)(cid:9)(cid:6)(cid:8)(cid:9)(cid:10)(cid:6)(cid:18)(cid:7)(cid:2)(cid:14)(cid:6)(cid:20)(cid:8)(cid:2)(cid:23)(cid:10)(cid:20)(cid:6)(cid:11)(cid:25)(cid:6)(cid:5)(cid:10)=(cid:10)(cid:14)(cid:11)(cid:16)(cid:21)(cid:10)(cid:7)(cid:8)J(cid:6)(cid:6)
Completion of these important bempedoic acid initiatives will
(cid:16)(cid:11)(cid:20)(cid:4)(cid:8)(cid:4)(cid:11)(cid:7)(cid:6)(cid:31)(cid:20)(cid:16)(cid:10)’(cid:4)(cid:11)(cid:7)(cid:6)(cid:8)(cid:11)(cid:6)(cid:18)(cid:14)(cid:10)(cid:6)(cid:25)(cid:11)’(cid:6)(cid:23)(cid:14)(cid:11)(cid:13)(cid:2)(cid:14)(cid:6)’(cid:10)(cid:23)(cid:12)(cid:14)(cid:2)(cid:8)(cid:11)’(cid:28)(cid:6)(cid:2)(cid:16)(cid:16)’(cid:11)=(cid:2)(cid:14)(cid:6)(cid:11)(cid:25)(cid:6)(cid:8)(cid:9)(cid:10)(cid:20)(cid:10)(cid:6)
innovative therapies in the near future.
N(cid:10)(cid:6)Q(cid:7)(cid:11)4(cid:6)(cid:8)(cid:9)(cid:2)(cid:8)(cid:6)(cid:2)(cid:16)(cid:16)(cid:14)(cid:28)(cid:4)(cid:7)(cid:23)(cid:6)(cid:11)(cid:12)’(cid:6)(cid:20)(cid:3)(cid:4)(cid:10)(cid:7)(cid:8)(cid:4)(cid:18)(cid:3)(cid:6)(cid:10)(cid:19)(cid:16)(cid:10)’(cid:8)(cid:4)(cid:20)(cid:10)(cid:6)(cid:4)(cid:7)(cid:6)(cid:3)(cid:9)(cid:11)(cid:14)(cid:10)(cid:20)(cid:8)(cid:10)’(cid:11)(cid:14)(cid:6)(cid:13)(cid:4)(cid:11)(cid:14)(cid:11)(cid:23)(cid:28)(cid:6)
4(cid:4)(cid:14)(cid:14)(cid:6)(cid:9)(cid:10)(cid:14)(cid:16)(cid:6)(cid:8)’(cid:2)(cid:7)(cid:20)(cid:25)(cid:11)’(cid:21)(cid:6)(cid:8)(cid:9)(cid:10)(cid:6)(cid:14)(cid:4)=(cid:10)(cid:20)(cid:6)(cid:11)(cid:25)(cid:6)(cid:21)(cid:4)(cid:14)(cid:14)(cid:4)(cid:11)(cid:7)(cid:20)(cid:6)(cid:11)(cid:25)(cid:6)(cid:16)(cid:2)(cid:8)(cid:4)(cid:10)(cid:7)(cid:8)(cid:20)(cid:6)(cid:20)(cid:8)(cid:4)(cid:14)(cid:14)(cid:6)(cid:20)(cid:12)(cid:24)(cid:10)’(cid:4)(cid:7)(cid:23)(cid:6)(cid:25)’(cid:11)(cid:21)(cid:6)
(cid:8)(cid:9)(cid:10)(cid:6)(cid:10)(cid:24)(cid:10)(cid:3)(cid:8)(cid:20)(cid:6)(cid:11)(cid:25)(cid:6)(cid:10)(cid:14)(cid:10)=(cid:2)(cid:8)(cid:10)(cid:5)(cid:6)*<*(cid:15)(cid:3)(cid:9)(cid:11)(cid:14)(cid:10)(cid:20)(cid:8)(cid:10)’(cid:11)(cid:14)(cid:29)(cid:6)(cid:10)(cid:20)(cid:16)(cid:10)(cid:3)(cid:4)(cid:2)(cid:14)(cid:14)(cid:28)(cid:6)(cid:8)(cid:9)(cid:11)(cid:20)(cid:10)(cid:6)(cid:3)(cid:11)(cid:7)(cid:20)(cid:4)(cid:5)(cid:10)’(cid:10)(cid:5)(cid:6)
“statin intolerant”. Our commitment to patients and their physicians
is unwavering: to provide innovative, complementary, convenient,
(cid:3)(cid:11)(cid:20)(cid:8)(cid:15)(cid:10)(cid:24)(cid:10)(cid:3)(cid:8)(cid:4)=(cid:10)(cid:29)(cid:6)(cid:11)’(cid:2)(cid:14)(cid:29)(cid:6)(cid:11)(cid:7)(cid:3)(cid:10)(cid:15)(cid:5)(cid:2)(cid:4)(cid:14)(cid:28)(cid:6)*<*(cid:15)(cid:3)(cid:9)(cid:11)(cid:14)(cid:10)(cid:20)(cid:8)(cid:10)’(cid:11)(cid:14)(cid:6)(cid:14)(cid:11)4(cid:10)’(cid:4)(cid:7)(cid:23)(cid:6)(cid:8)(cid:9)(cid:10)’(cid:2)(cid:16)(cid:4)(cid:10)(cid:20)(cid:6)
while meeting the highest standards established by global regulatory
authorities.
On behalf of all Esperion colleagues, I want to thank you for your
continued support of Esperion, our team of Lipid Management
Experts, and bempedoic acid. We remain fully committed to building
sustainable value for you and all of our stakeholders as we advance
bempedoic acid towards expected global regulatory submissions by
(cid:8)(cid:9)(cid:10)(cid:6)(cid:18)’(cid:20)(cid:8)(cid:6)(cid:9)(cid:2)(cid:14)(cid:25)(cid:6)(cid:11)(cid:25)(cid:6)%$#XJ(cid:6)
TIM MAYLEBEN
(cid:26)’(cid:10)(cid:20)(cid:4)(cid:5)(cid:10)(cid:7)(cid:8)(cid:6)(cid:2)(cid:7)(cid:5)(cid:6)"(cid:9)(cid:4)(cid:10)(cid:25)(cid:6)(cid:31)(cid:19)(cid:10)(cid:3)(cid:12)(cid:8)(cid:4)=(cid:10)(cid:6)[>(cid:3)(cid:10)’
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(cid:2) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FORM 10-K
For the fiscal year ended December 31, 2016
Or
(cid:3) 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
(State or Other Jurisdiction of
Incorporation or Organization)
3891 Ranchero Drive, Suite 150
Ann Arbor, Michigan 48108
(Address of Principal Executive Offices)
26-1870780
(I.R.S. Employer Identification No.)
48108
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
(734) 887-3903
(Registrant’s Telephone Number, Including Area Code)
Title of each class
Name of each exchange on which registered
Common Stock, $0.001 par value
NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes (cid:3) No (cid:2)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes (cid:3) No (cid:2)
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 (cid:2) No (cid:3)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted 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 and post such files). Yes (cid:2) No (cid:3)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:3)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of
the Exchange Act. (Check one):
Large accelerated filer (cid:3)
Accelerated filer (cid:2)
Non-accelerated filer (cid:3)
(Do not check if a
smaller reporting company)
Smaller reporting company (cid:3)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:3) No (cid:2)
The aggregate market value of the voting stock held by non-affiliates of the registrant on June 30, 2016, based upon the closing
price of $9.88 of the registrant’s common stock as reported on the NASDAQ Global Market, was $222.7 million. Shares of the
registrant’s common stock held by each officer and director and each person known to the registrant to own 10% or more of the
outstanding voting power of the registrant have been excluded in that such persons may be deemed affiliates. This determination of
affiliate status is not a determination for other purposes.
As of February 1, 2017, there were 22,555,413 shares of the registrant’s common stock, $0.001 par value per share, outstanding.
Part III of this Annual Report on Form 10-K incorporates by reference information from the definitive Proxy Statement for the
registrant’s 2017 Annual Meeting of Shareholders, which is expected to be filed with the Securities and Exchange Commission not later
than 120 days after the Registrant’s fiscal year ended December 31, 2016.
DOCUMENTS INCORPORATED BY REFERENCE
[This page intentionally left blank]
TABLE OF CONTENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 15.
Item 16.
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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1
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements that involve substantial
risks and uncertainties. All statements other than statements of historical facts contained in this Annual
Report on Form 10-K, including statements regarding our strategy, future operations, future financial
position, future revenue, projected costs, prospects, plans, objectives of management and expected
market growth, are forward-looking statements. These statements involve known and unknown risks,
uncertainties and other important factors that may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed
or implied by the forward-looking statements.
The words ‘‘anticipate,’’ ‘‘believe,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘may,’’ ‘‘plan,’’ ‘‘predict,’’
‘‘project,’’ ‘‘target,’’ ‘‘potential,’’ ‘‘will,’’ ‘‘would,’’ ‘‘could,’’ ‘‘should,’’ ‘‘continue,’’ and similar expressions
are intended to identify forward-looking statements, although not all forward-looking statements
contain these identifying words. These forward-looking statements include, among other things,
statements about:
• our ability to obtain regulatory approval for bempedoic acid, including statements related to
specific clinical studies or clinical observations that will be required for such approval;
• our ability to achieve clinical or regulatory milestones with our existing cash resources;
• the design, timing or outcome of our Phase 3 clinical program of bempedoic acid;
• the design, timing or outcome of our cardiovascular outcomes trial, or CVOT, of bempedoic
acid;
• the design, timing or outcome of our other clinical studies of bempedoic acid;
• our ability to recruit and enroll patients, particularly ‘‘statin intolerant’’ patients, in any ongoing
or future clinical study;
• our ability to replicate positive results from a completed clinical study in a future clinical study;
• our ability to fund our development programs with existing capital or our ability to raise
additional capital in the future;
• the potential benefits, effectiveness or safety of bempedoic acid, as compared to statins and
other low-density lipoprotein cholesterol, or LDL-C, lowering therapies, either those currently
available or those in development;
• our ability to respond and adhere to changes in regulatory requirements, including any
requirement to conduct additional, unplanned clinical studies in connection with our pursuit of
bempedoic acid as an LDL-C lowering therapy;
• guidelines relating to LDL-C levels and cardiovascular risk that are generally accepted within
the medical community, including recent changes and any future changes to such guidelines;
• reimbursement policies, including any future changes to such policies or related government
legislation, and their impact on our ability to market, distribute and obtain payment for
bempedoic acid, if approved;
• the accuracy of our estimates of the size and growth potential of the LDL-C lowering market
and the rate and degree of bempedoic acid’s market acceptance, if approved;
• our ability to obtain and maintain intellectual property protection for bempedoic acid without
infringing on the intellectual property rights of others;
• the loss of any of our key scientific or management personnel;
2
• our intention to seek to establish strategic relationships or partnerships; and
• our ability to compete with other companies that are, or may be, developing or selling products
that may compete with bempedoic acid, if approved.
These forward-looking statements are only predictions and we may not actually achieve the plans,
intentions or expectations disclosed in our forward-looking statements, so you should not place undue
reliance on our forward-looking statements. Actual results or events could differ materially from the
plans, intentions and expectations disclosed in the forward-looking statements we make. We have based
these forward-looking statements largely on our current expectations and projections about future
events and trends that we believe may affect our business, financial condition and operating results. We
have included important factors in the cautionary statements included in this Annual Report on
Form 10-K, particularly in Item 1A. Risk Factors, that could cause actual future results or events to
differ materially from the forward-looking statements that we make. Our forward-looking statements do
not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or
investments we may make.
You should read this Annual Report on Form 10-K and the documents that we have filed as
exhibits to the Annual Report on Form 10-K with the understanding that our actual future results may
be materially different from what we expect. We do not assume any obligation to update any forward-
looking statements whether as a result of new information, future events or otherwise, except as
required by applicable law.
3
All brand names or trademarks appearing in this report are the property of their respective holders.
Unless the context requires otherwise, references in this report to ‘‘Esperion’’ the ‘‘Company,’’ ‘‘we,’’ ‘‘us,’’
and ‘‘our’’ refer to Esperion Therapeutics, Inc.
PART I
Item 1. Business
Overview
We are the lipid management company, a late-stage pharmaceutical company focused on
developing and commercializing convenient, complementary, cost-effective, once-daily, oral therapies
for the treatment of patients with elevated 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 that will make a substantial impact on
reducing global cardiovascular disease, or CVD; the leading cause of death around the world. With a
targeted mechanism of action, bempedoic acid, our lead product candidate, is a first-in-class, orally
available, once-daily ATP-citrate lyase, or ACL, inhibitor that reduces cholesterol biosynthesis and
lowers elevated levels of LDL-C by up-regulating the LDL receptor, but with reduced potential for
muscle-related side effects. In addition to bempedoic acid as monotherapy, we are also developing
bempedoic acid in a fixed dose combination with ezetimibe, an approved, non-statin, oral, LDL-C
lowering therapy.
The clinical development program for bempedoic acid consists of two major components: 1) the
global pivotal Phase 3 LDL-C lowering program in high CVD risk patients with hypercholesterolemia
on optimized background lipid-modifying therapy, including maximally tolerated statins, and patients
who are only able to tolerate less than the lowest approved daily starting dose of their statin and are
considered ‘‘statin intolerant,’’ and 2) the global CVOT—known as Cholesterol Lowering via
BEmpedoic Acid, an ACL-inhibiting Regimen (CLEAR) Outcomes, in patients with
hypercholesterolemia and high CVD risk and who are considered ‘‘statin intolerant’’. We initiated our
global Phase 3 clinical development program in January 2016, with the 52-week global pivotal Phase 3
long-term safety and tolerability study (Study 1), and initiated the three remaining global pivotal
LDL-C lowering efficacy studies in December 2016. We expect to report top-line results from our
global Phase 3 program in its entirety by mid-2018, and intend to use positive results from our Phase 3
program to support our submissions for an LDL-C lowering indication in the U.S. and Europe by the
first half of 2019. We also initiated the CLEAR Outcomes CVOT in December 2016, and intend to use
positive results from this CVOT to support our submissions for a CV risk reduction indication in the
U.S. and Europe by 2022.
We believe that bempedoic acid, if approved, has the potential to become a convenient and
complementary oral therapy to significantly reduce elevated levels of LDL-C in patients inadequately
treated with current lipid-modifying therapies. It is estimated that 40 million patients in the U.S. are
taking statins, with approximately 5-20 percent of these patients only able to tolerate less than the
lowest approved daily starting dose of their statin and considered ‘‘statin intolerant’’.
We were founded in January 2008, by former executives of and investors in the original Esperion
Therapeutics, Inc., a biopharmaceutical company which was primarily focused on the research and
development of therapies to regulate high-density lipoprotein, or HDL. The original Esperion was
acquired by Pfizer Inc. in 2004. Bempedoic acid was first discovered at the original Esperion and we
subsequently acquired the rights to the product from Pfizer in 2008. We own the exclusive worldwide
rights to bempedoic acid.
4
Bempedoic Acid
With a targeted mechanism of action, bempedoic acid is a first-in-class, orally available, once-daily
ACL inhibitor that reduces cholesterol biosynthesis and lowers elevated levels of LDL-C by
up-regulating the LDL receptor, but with reduced potential for muscle-related side effects. Completed
Phase 1 and 2 studies in more than 800 patients treated with bempedoic acid have produced clinically
relevant LDL-C lowering results of up to 30 percent as monotherapy, approximately 50 percent in
combination with ezetimibe, and an incremental 20+ percent when added to stable statin therapy.
Mechanism of Action
In November 2016, we announced the publication of ‘‘Liver-specific ATP-citrate lyase inhibition by
bempedoic acid decreases LDL-C and attenuates atherosclerosis,’’ by Stephen L. Pinkosky, our
Associate Director of Translational Research and Biology, et al., in Nature Communications. The paper
systematically outlines the experiments and analyses undertaken by us and our collaborators to fully
understand the mechanism of action for how bempedoic acid reduces LDL-C, including its specificity
for the liver. Bempedoic acid is a prodrug that once activated, inhibits ACL, an enzyme upstream of
HMG-CoA reductase (the molecular target of statins) in the cholesterol synthesis pathway. Like statins,
bempedoic acid decreases cholesterol synthesis in the liver, which results in decreased intracellular
cholesterol, up-regulation of LDL receptor activity and increased LDL-C clearance from the blood.
Although bempedoic acid and statins both inhibit cholesterol synthesis in the liver, an important
differentiating feature is that, unlike statins, bempedoic acid is inactive in skeletal muscle. Specifically,
bempedoic acid is a prodrug which requires activation by a specific enzyme, very long-chain acyl-CoA
synthetase, or ACSVL1, to convert bempedoic acid to its CoA activated form. This enzyme is present
in the liver but not in skeletal muscle. Therefore, bempedoic acid does not inhibit the cholesterol
biosynthesis pathway in skeletal muscle, thus providing a mechanistic basis for reduced potential for
muscle-related adverse effects. Bempedoic acid has been shown to provide incremental lowering of
LDL-C when used in combination with both ezetimibe and statins at all doses.
Fixed Dose Combination Bempedoic Acid and Ezetimibe (BA+EZ)
In the second quarter of 2016, the Food and Drug Administration, or FDA, accepted our
submission of an Investigational New Drug, or IND, application for the fixed dose combination of
bempedoic acid 180 mg and ezetimibe 10 mg, or BA+EZ, which is in development for the same
indications as bempedoic acid monotherapy (LDL-C lowering and CV risk reduction). We recently
completed a bioavailability study and a formulation of BA+EZ has been selected for manufacturing,
development and, if approved, commercialization. We expect to announce clinical development and
regulatory plans for BA+EZ in the first half of 2017.
Cardiovascular Disease and Elevated LDL-C
Cardiovascular disease, which results in heart attacks, strokes and other cardiovascular events,
represents the number one cause of death and disability in western societies. The American Heart
Association, or AHA, estimates that approximately 800,000 deaths in the United States were caused by
cardiovascular disease in 2013.
Elevated LDL-C is well-accepted as a significant risk factor for cardiovascular disease and the
CDC estimates that 78 million U.S. adults have elevated levels of LDL-C. A consequence of elevated
LDL-C is atherosclerosis, which is a disease that is characterized by the deposition of excess cholesterol
and other lipids in the walls of arteries as plaque. The development of atherosclerotic plaques often
leads to cardiovascular disease. The risk relationship between elevated LDL-C and cardiovascular
disease was first defined by the Framingham Heart Study, which commenced in 1948 to define the
factors that contributed to the development of cardiovascular disease. The study enrolled participants
5
who did not have any form of cardiovascular disease and followed them over a long period of time.
Elevated LDL-C was identified early on as key risk factor for the eventual development of
cardiovascular disease.
The hypothesis that lowering elevated levels of LDL-C would translate into reduced risk of
cardiovascular disease was first proven in 1984 with the publication of the Lipid Research Clinics
Coronary Primary Prevention Trial. In this study, treatment with cholestyramine, a bile acid sequestrant,
showed a 20% reduction in LDL-C and, importantly, a 19% reduction in risk of cardiovascular disease
death or nonfatal myocardial infarction, or heart attack. This was the first major clinical study to
demonstrate a direct relationship between lowering LDL-C levels and reduced risk of major
cardiovascular events.
The first marketed statin, lovastatin, was approved for use in the United States in 1987 as a
therapy to lower elevated LDL-C levels. That same year, the National Cholesterol Education Program
issued its first guidelines for the diagnosis and treatment of patients with elevated LDL-C. Over the
subsequent 22 years, seven more statins were approved for use to lower elevated LDL-C levels.
In 1994 the first clinical outcomes study with a statin was published. This study demonstrated a
significant reduction in risk for total mortality and major cardiovascular events. A series of additional
clinical outcomes studies with statins have each shown that lowering elevated LDL-C translated into
reduced risk for major cardiovascular events. The relationship between the extent of LDL-C lowering
and reduction in cardiovascular risk appeared to be linear, which has supported a hypothesis that lower
LDL-C is better for cardiovascular risk. This hypothesis was tested and proven in the TNT (Treating to
New Targets) study where an on-treatment LDL-C level of 77 mg/dL associated with 80 mg of
atorvastatin treatment translated into a statistically significant 22% reduction in risk of major
cardiovascular events as compared with the 101 mg/dL on-treatment LDL-C level associated with
10 mg of atorvastatin.
Major completed clinical outcomes studies with statin therapies
Study name
4S
WOSCOPS
AFCAPS/TexCAPS
TNT
JUPITER
Study drug .
.
No. of patients
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Study design .
.
.
Patient population .
.
Baseline LDL-C (mg/dL) .
LDL-C reduction .
.
CV RRR .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Simvastatin
4,444
Placebo controlled,
monotherapy
Secondary prevention
188
35%
35%
Pravastatin
6,595
Placebo controlled,
monotherapy
Primary Prevention
192
26%
31%
Lovastatin
6,605
Placebo controlled,
monotherapy
Primary Prevention
156
26%
37%
Atorvastatin
10,001
Low dose vs high
dose atorvastatin
Secondary Prevention
98
21%
22%
Rosuvastatin
17,803
Placebo controlled,
monotherapy
Primary Prevention
108
50%
44%
In November 2014, the results of the IMPROVE-IT (IMProved Reduction of Outcomes: Vytorin
Efficacy International Trial) study were presented at the Scientific Sessions of the AHA. 18,144 patients
with acute coronary syndrome were enrolled in IMPROVE-IT and were randomized to receive either
40 mg of simvastatin or 10 mg of ezetimibe/40 mg of simvastatin, and were followed until
> 5,250 events (cardiovascular death, heart attack, documented unstable angina requiring
hospitalization, coronary revascularization or stroke) occurred. The addition of ezetimibe to simvastatin
resulted in a 6.4% relative risk reduction (p=0.016) in the aggregate of the events described above.
This was the first study to demonstrate incremental clinical benefit with a non-statin when added to a
statin.
The direct relationship between lower LDL-C levels and reduced risk for major cardiovascular
events has been consistently demonstrated in 18 clinical studies completed over the last 28 years
involving more than 90,000 patients. As a result, physicians are highly focused on lowering LDL-C
levels in their patients, and we believe there is a trend towards even more aggressive LDL-C lowering.
For example, in the United States, increased attention has been placed on aggressive LDL-C
management by organizations such as the National Cholesterol Education Program, or NCEP, the AHA
6
and the American College of Cardiology, or ACC. Additionally, both the Canadian Cardiovascular
Society and the Joint British Societies have supported even lower LDL-C treatment targets for
high-risk patients. This has led to the combination of statins with other treatments, such as ezetimibe.
In July 2004, the NCEP issued an update to its Adult Treatment Panel III clinical practice
guidelines on cholesterol management, advising physicians to consider new, more intensive treatment
options for people at very high risk, high risk and moderately high risk for cardiovascular disease. The
LDL-C goals in these updated clinical practice guidelines, which are presented below, contemplate
initiating drug therapy at lower LDL-C thresholds, thus expanding the number of potential patients for
LDL-C lowering therapy.
NCEP ATP III Clinical Practice Guidelines
Patient Cardiovascular Disease Risk
LDL-C
Goal
Very High Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . < 70 mg/dL
Cardiovascular Disease and Cardiovascular Disease Risk Equivalent . < 100 mg/dL
Multiple (2+) Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . < 130 mg/dL
0 - 1 Risk Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . < 160 mg/dL
In November 2013, the American College of Cardiology, or ACC, and the AHA issued new
guidelines for the treatment of elevated cholesterol. For the first time in more than 20 years, the new
guidelines do not include specific, numerical LDL-C treatment goals for patients with elevated LDL-C.
However, the guidelines strongly recommend the use of more potent statins and intensive statin therapy
in patients with elevated LDL-C. The new guidelines also significantly expanded the number of patients
eligible for statin therapy, including patients with a history of cardiovascular disease including stroke,
patients with both Type 1 and Type 2 diabetes, all patients with LDL-C (cid:2) 190 mg/dL and patients with
a 10-year risk of > 7.5% of developing cardiovascular disease. Also for the first time, the guidelines
acknowledge the existence of ‘‘statin intolerance’’, and incorporate ‘‘statin intolerance’’ into the
consideration of treatment choices and into the evaluation of statin safety.
Other organizations continue to utilize goals of treatment in their guidelines. The National Lipid
Association, or NLA, guidelines established < 100 mg/dL as the LDL-C goal of treatment for patients
at low, moderate and high risk. Patients considered to be at very high risk have a goal of < 70 mg/dL
of LDL-C. The International Atherosclerosis Society has recommended optimal LDL-C levels of
< 100 mg/dL for patients who have not had a cardiovascular event, and < 70 mg/dl for patients who
have had a cardiovascular event.
7
Currently Approved Therapies
The following table illustrates common therapies used to treat elevated LDL-C:
Class of Therapy
Labeled Indication
Average
LDL-C
Change
from
Baseline
Key Issues/Side Effects
Statins . . . . . . . . . . . . Reduction in LDL-C in
Up to 63% • Skeletal muscle effects, elevated liver function
patients with elevated
LDL-C
Reduction in total mortality
Reduction in risk of major
adverse cardiovascular
events (MACE) in multiple
populations that were
tested
tests
• FDA recently warned that the use of statins is
associated with increases in HbA1c and fasting
serum glucose levels
Bile acid sequestrants . . Reduction in LDL-C in
Up to 20% • Limited LDL-C lowering
patients with elevated
LDL-C(1)
Retard the rate of
progression and increase
the rate of regression of
coronary atherosclerosis
Reduction in LDL-C in
patients with elevated
LDL-C
Cholesterol absorption
inhibitors
. . . . . . . .
• Gastrointestinal disorders
• Elevation in triglycerides
Up to 18% • Limited LDL-C lowering; IMPROVE-IT study
not in US prescribing information
Niacin . . . . . . . . . . . . Reduction in LDL-C and
triglycerides; increases in
HDL-C, reduction in
Lipoprotein (a)
Up to 17% • Flushing (i.e., warmth or redness) hepatic
toxicity, skeletal muscle effects and gout
• Limited LDL-C lowering
Reduction in recurrent
nonfatal myocardial
infarction (MI) in patients
with prior history of MI
Fibrates . . . . . . . . . . . Reduction in triglycerides
Up to 21% • Gallstones, skeletal muscle effects and liver
and LDL-C in patients with
hypertriglyceridemia or
mixed dyslipidemia
Reduction in risk of
developing coronary heart
disease (CHD) in patients
with Type IIb Fredericksons
hyperlipidemia and no
prior history of CHD
Reduction in LDL-C as
adjunct to maximally
tolerated statin therapy in
patients with HeFH and/or
ASCVD
Proprotein convertase
subtilisin kexin 9
(PCSK9) inhibitors . .
disorders
• Limited LDL-C lowering (may in some cases
raise LDL-C); used primarily for triglyceride
lowering
Up to 64% • High cost as biologic, injectable route of
administration
• No effect on hsCRP
• Ongoing CVOTs
(1) Welchol(cid:4), a bile acid sequestrant, is also approved for improving glycemic control in adults with Type 2 diabetes.
8
Other Approved Therapies for Specific Populations
A small subpopulation of patients with extremely elevated levels of LDL-C, estimated to be
approximately 300 patients in the U.S., suffer from homozygous familial hypercholesterolemia, or
HoFH. HoFH is a serious and rare genetic disease and patients with HoFH lack or have dysfunctional
LDL-receptors and cannot remove LDL-particles and LDL-C from the blood. As a result, untreated
HoFH patients typically have LDL-C levels in the range of 450 mg/dL to 1,000 mg/dL. Microsomal
triglyceride transfer protein, or MTP inhibitors, a PCSK9 inhibitor and an ApoB antisense
oligonucleotide are approved therapies to lower elevated LDL-C levels in patients with a clinical or
laboratory diagnosis of HoFH. Given the serious safety concerns with the MTP inhibitor and ApoB
antisense oligonucleotide, specifically hepatotoxicity, the FDA has restricted their usage to this narrow
subpopulation.
Statin Therapy
Statins are the standard of care for patients with hypercholesterolemia today and are highly
effective at lowering LDL-C. This class of drugs includes atorvastatin calcium, marketed as Lipitor(cid:4),
the most prescribed LDL-C lowering drug in the world and the best-selling pharmaceutical drug in
history. Approximately 25% of Americans over the age of 45 from 2005 to 2008 were treated for
elevated LDL-C levels with statin therapy, according to a National Health and Nutrition Examination
Survey.
Statins are selective, competitive inhibitors of HMG-CoA reductase, a rate-limiting enzyme in the
cholesterol biosynthesis pathway, and work primarily in liver cells. Statin inhibition of cholesterol
synthesis increases the number of LDL receptors on the surface of liver cells. This increase in LDL
receptors increases uptake of LDL particles into liver cells from the blood, thus lowering LDL-C levels.
Statins are also thought to have the potential to inhibit cholesterol synthesis in skeletal muscle. This
inhibition could be linked to the myalgia associated with statin use as seen in patients with ‘‘statin
intolerance’’.
The benefits of statin use in lowering LDL-C levels and improving cardiovascular outcomes are
well documented. Despite the effectiveness of statins and their broad market acceptance, there is a
significant subset of patients who are unable to tolerate statins due to muscle pain or weakness,
memory loss or increased glucose levels, or who are otherwise unable to reach their LDL-C goal on
statin therapy alone. In rare but extreme cases, statins can lead to muscle breakdown, kidney failure
and death. In addition, the FDA has recently warned that statins can cause hyperglycemia, an increase
in blood sugar levels and create an increased risk of worsening of glycemic control and of new onset
diabetes. There are approximately 36 million U.S. adults with elevated LDL-C levels who are not on an
LDL-C lowering therapy. For these reasons, we believe there is a need for new therapies to treat
patients with elevated LDL-C.
Patients with Heterozygous Familial Hypercholesterolemia (HeFH) and/or Atherosclerotic Cardiovascular
Disease (ASCVD) who need additional lowering of LDL-C—Market Opportunity for Bempedoic Acid and
BA+EZ
We are pursuing the development of bempedoic acid and BA+EZ as an add-on to maximally
tolerated statin therapy for patients with HeFH and/or ASCVD who require additional lowering of
LDL-C. The severity of elevated LDL-C in these patients, their level of CVD risk and their therapeutic
options, including those patients only able to tolerate less than the lowest approved daily starting dose
of their statin and are considered to be ‘‘statin intolerant’’, all vary widely.
Patients with ASCVD and persistently elevated LDL-C despite maximally tolerated statin therapy
represent a large population with important unmet medical needs. In a retrospective analysis of United
States data, approximately one-third of high-risk patients treated with statin monotherapy for more
9
than three months failed to achieve LDL-C target levels of < 100mg/dL, and more than three-quarters
did not achieve the more stringent goal of < 70 mg/dL. Data from the TNT study showed that patients
treated with 80 mg of atorvastatin daily demonstrated a major cardiovascular event rate of 8.7% despite
having achieved mean LDL-C levels of 77 mg/dL. In this study, the higher-intensity atorvastatin 80 mg
regimen lowered both LDL-C and cardiovascular events to a greater extent than the lower-intensity
atorvastatin 10 mg regimen. These findings, among others, suggest that residual risk may be due to
residual hyperlipidemia.
This has prompted the study of non-statin therapies as add-on treatment to statins for incremental
reductions in LDL-C and CVD risk. The injectable PCSK9 inhibitors were recently granted approval in
the United States as an adjunct to maximally tolerated statin therapy for patients in these populations
that require additional lowering of LDL-C.
Within the ACVD and HeFH patient populations there are patients whose maximally tolerated
dose of a statin may be no statin at all. These are patients who are considered to ‘‘statin intolerant’’.
Muscle pain or weakness is the most common side effect experienced by statin users and the most
common cause for discontinuing therapy. Moreover, a significant proportion of patients remain on
statin therapy despite experiencing muscle-related side effects. Accordingly, we believe that in the
presence of a safe and effective complementary non-statin, oral, once-daily, small molecule LDL-C
lowering therapy, the ‘‘statin intolerant’’ market could grow substantially.
Recently Approved Therapies
PCSK9 Inhibitors
A number of larger biopharmaceutical companies have developed, or are currently developing, a
new class of biologic therapies that target proprotein convertase subtilisin kexin type 9, or PCSK9, an
enzyme involved in the degradation of LDL receptors. These PCSK9 inhibitors are injectable,
monoclonal antibodies that were evaluated as potential therapies to lower LDL-C. In 2015 the FDA
approved two PCSK9 inhibitors: alirocumab, which was developed by Sanofi and Regeneron
Pharmaceuticals and evolocumab, which was developed by Amgen, Inc. These therapies were approved
as an adjunct to diet and maximally tolerated statin therapy for patients with HeFH or ASCVD that
require additional lowering of LDL-C. Additionally, evolocumab was approved as an adjunct to diet
and other LDL-C lowering therapies for patients with HoFH. In 2016, Pfizer discontinued development
of its PCSK9 inhibitor, bococizumab, due to unanticipated attenuation of LDL-C lowering over time in
its Phase 3 studies. In February 2017, Amgen announced top-line results for the FOURIER (Further
Cardiovascular OUtcomes Research with PCSK9 Inhibition in Subjects with Elevated Risk) CVOT
where evolocumab significantly reduced the risk of cardiovascular events. Full results of FOURIER will
be announced in March 2017, during the Scientific Sessions of the American College of Cardiology
meeting.
As described in currently approved U.S. prescribing information, PCSK9 inhibitors have
demonstrated reductions of LDL-C as adjunct to maximally tolerated statin therapy in patients with
HeFH and/or ASCVD of up to 64%. When PCSK9 inhibitors were used in patients with
hypercholesterolemia considered to be ‘‘statin intolerant’’, LDL-C levels were reduced by 45-56%.
Notwithstanding the LDL-C lowering efficacy of PCSK9 inhibitors, we believe their adoption by
patients, physicians, and payors could be adversely impacted by their higher cost and their injectable
route of administration.
10
Additional Therapies in Development
CETP Inhibitors
A number of larger biopharmaceutical companies have tried to develop a class of therapies that
target cholesteryl ester transfer protein, or CETP, which mediates the transfer of cholesteryl esters from
HDL-particles to ApoB-containing particles. CETP inhibitors were initially designed to raise levels of
HDL-C and are required by FDA to complete CVOTs in Phase 3 prior to approval. Pfizer brought the
first drug in this class, torcetrapib, into clinical development but terminated development activities in
December 2006, due to an increase in all-cause mortality and cardiovascular events in the
ILLUMINATE (Investigation of Lipid Level Management to Understand its Impact in Atherosclerotic
Events) study. Two other CETP inhibitors, dalcetrapib from Roche and evacetrapib from Lilly, were
investigated in the dal-OUTCOMES and ACCELERATE studies, respectively. The development of
dalcetrapib and evacetrapib were terminated in May 2012, and October 2015, respectively, due to lack
of efficacy in their CVOTs, in spite of a 33% reduction in LDL-C in the case of evacetrapib. An
additional CETP inhibitor, anacetrapib, from Merck, is being developed and is currently being
investigated in the Phase 3 REVEAL (Randomized EValuation of the Effects of Anacetrapib through
Lipid-modification) study. Anacetrapib has been shown to significantly raise levels of HDL-C and to
lower LDL-C. This Phase 3 CVOT is expected to complete and report top-line results in the middle of
2017.
PCSK9 Inhibitors
The Medicines Company/Alnylam are developing inclisiran, which is currently in Phase 2 clinical
studies. Unlike the PCSK9 antibodies from Sanofi/Regeneron and Amgen, inclisiran is a long-acting
RNA interference therapeutic agent that inhibits the synthesis of PCSK9. Findings from clinical studies
suggest that inclisiran may be dosed every 3 or 6 months. Like the PCSK9 antibodies, inclisiran is an
injectable therapy.
Clinical Experience
To date, bempedoic acid has been studied in over 800 patients across six patient populations:
healthy volunteers; patients with elevated LDL-C levels; patients with Type 2 diabetes and elevated
LDL-C levels; patients with elevated LDL-C levels and a history of ‘‘statin intolerance’’; patients with
elevated LDL-C levels taking low, moderate and high doses of the most commonly prescribed statins;
and patients with both elevated LDL-C and hypertension. The individual design and results of each of
the completed Phase 2 clinical studies of bempedoic acid are summarized below.
11
Completed Clinical Studies
To date, we have completed the following Phase 2 clinical studies of bempedoic acid:
Description
1002-035
Title
Phase 2 PK/PD clinical study in patients treated with
high-dose statin therapy
A randomized, double-blind, multi-center, placebo-
controlled, parallel group clinical study that evaluated
180 mg of bempedoic acid versus placebo in patients
already on stable 80 mg atorvastatin therapy
Treatment
Duration
Subjects
Total
Treated
4 weeks
68
45
1002-014
Phase 2 exploratory clinical safety study in patients with
both elevated LDL-C and hypertension
6 weeks
143
71
A randomized, double-blind, multi-center, placebo-
controlled, parallel group exploratory study that
evaluated 180 mg of bempedoic acid versus placebo in
patients with both elevated LDL-C and hypertension
1002-009
Phase 2 clinical study in patients with elevated LDL-C
already receiving statin therapy
12 weeks
134
88
1002-008
1002-007
A randomized, double-blind, multi-center placebo-
controlled clinical study that evaluated 180 mg and
120 mg of bempedoic acid versus placebo in patients
already on stable statin therapy
Phase 2 clinical study of safety and efficacy in patients
with elevated LDL-C, with or without a history of
‘‘statin intolerance’’
A randomized, double-blind, parallel-group, multicenter
study to evaluate the efficacy and safety of bempedoic
acid monotherapy, ezetimibe monotherapy, and the
combination of bempedoic acid and ezetimibe in patients
with elevated LDL-C, with or without ‘‘statin
intolerance’’
Phase 2 clinical study of safety and pharmacokinetic
interaction in patients with elevated LDL-C on a
background of atorvastatin 10 mg
Placebo-controlled, randomized, double-blind, drug
interaction study to evaluate the safety, tolerability and
effect on atorvastatin pharmacokinetics of bempedoic
acid added to atorvastatin 10 mg/day in patients with
elevated LDL-C
12 Weeks
349
249
8 Weeks
58
42
1002-006
Phase 2 proof-of-concept clinical study in patients with
elevated LDL-C and a history of ‘‘statin intolerance’’
8 Weeks
56
37
Placebo-controlled, randomized, double-blind,
multicenter study to evaluate the efficacy and safety of
bempedoic acid in patients with elevated LDL-C and a
history of ‘‘statin intolerance’’
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Description
1002-005
Title
Phase 2 proof-of-concept clinical study in patients with
elevated-LDL-C and Type 2 diabetes
Placebo-controlled, randomized, double-blind, single site
clinical study to evaluate the LDL-C lowering efficacy
and safety of bempedoic acid in patients with Type 2
diabetes
Treatment
Duration
Subjects
Total
Treated
4 Weeks
60
30
1002-003
Phase 2 proof-of-concept clinical study in patients with
elevated LDL-C
12 Weeks
177
133
Placebo-controlled, randomized, double-blind, parallel
group, multicenter clinical study to evaluate the LDL-C
lowering efficacy and safety of bempedoic acid in
patients with elevated LDL-C and either normal or
elevated triglycerides
Overall, bempedoic acid has been well-tolerated and associated with no dose-limiting adverse
events, or AEs, in over 800 patients who received bempedoic acid.
Phase 2 Clinical Studies Completed in 2016
1002-035—Phase 2 pharmacokinetics/pharmacodynamics clinical study in patients treated with high-dose
statin therapy
On October 13, 2016, we announced top-line results for our Phase 2 PK/PD (1002-035) clinical
study. The eight-week, U.S.-based, multi-center, randomized, double-blind, parallel group study
evaluated 68 patients on stable atorvastatin 80 mg per day. All patients in the study received
atorvastatin 80 mg for four weeks. Patients were then randomized to receive either bempedoic acid
180 mg, or placebo, for four weeks. The primary objectives of the study were to assess the LDL-C
lowering efficacy of bempedoic acid 180 mg versus placebo on a background of atorvastatin 80 mg, as
well as multiple-dose plasma PK of atorvastatin 80 mg alone and in combination with bempedoic acid.
Secondary objectives included assessment of the effect of bempedoic acid on lipid and cardiometabolic
biomarkers, including high-sensitivity C-reactive protein, or hsCRP; and characterization of the
tolerability and safety of bempedoic acid.
Patients treated with bempedoic acid 180 mg achieved 22 percent (p=0.0028) LDL-C lowering
from baseline compared to placebo with all patients on a background of atorvastatin 80 mg. There was
a 13 percent reduction in LDL-C in the bempedoic acid group and a nine percent increase in LDL-C
in the placebo group when added to background atorvastatin 80 mg. Bempedoic acid also demonstrated
an incremental reduction of 35 percent (p=0.0020) in hsCRP. Bempedoic acid added to atorvastatin
80 mg produced no clinically relevant effects on atorvastatin PK, and appeared to be safe and
well-tolerated, with no serious adverse events reported.
Phase 1 Clinical Studies Completed in 2016
1002-037—Phase 1 clinical pharmacology study to assess the safety and tolerability of bempedoic acid
added to maximally tolerated statin therapy
On October 13, 2016, we announced top-line results from our Phase 1 PK (1002-037) clinical
study. The open-label study assessed the PK levels in 48 healthy volunteers receiving single doses of the
highest doses of the most commonly prescribed statins—atorvastatin 80 mg, rosuvastatin 40 mg,
simvastatin 40 mg and pravastatin 80 mg—when added to steady-state bempedoic acid 180 mg. The PK
profiles demonstrated in 1002-037 were consistent with those seen in previous studies conducted with
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bempedoic acid, and did not increase with the highest doses of the statins tested in combination with
bempedoic acid.
1002-034—Phase 1 bioavailability study to assess the relative oral bioavailability of bempedoic acid
180 mg and ezetimibe 10 mg (BA+EZ)
1002-034 is a Phase 1, randomized, open-label, single-dose study which is designed to assess the
relative oral bioavailability of bempedoic acid 180 mg and ezetimibe 10 mg co-administered as
individual tablets versus as two different fixed dose combination formulation tablets in healthy human
subjects. Based on the findings from this study, we have selected the formulation for BA+EZ which we
intend to take forward into development. We expect to announce clinical development and regulatory
plans for BA+EZ in the first half of 2017.
Overall Safety Observations
To date, in completed studies, over 800 patients have been treated with bempedoic acid for periods
of up to 12 weeks at maximum repeated doses of 240 mg per day. Bempedoic acid has been safe and
well-tolerated with no dose-limiting side effects identified to date in our ongoing or completed clinical
studies. No clinical safety trends have emerged to date.
LDL
Lowering
Efficacy
(placebo
corrected)
Up to 22%
Up to 24%
Up to 20%
Up to 30%
Up to 48%
Phase
Patient Population
Study Design
Duration
Patients
(Treated)
Doses
. Phase 2 Elevated LDL
. Phase 2 Elevated LDL;
hypertension
. Phase 2 Elevated LDL; statin
add-on
Placebo controlled,
80 mg atorvastatin
Placebo controlled
4 weeks
68 (45)
180 mg
6 weeks
143 (71)
180mg
Placebo controlled,
12 weeks
134 (89)
120mg, 180mg
. Phase 2 Elevated LDL; ‘‘statin Monotherapy and in
12 weeks
349 (250)
120 mg, 180 mg
intolerant’’ and tolerant
. Phase 2 Elevated LDL; statin
add-on
. Phase 2 Elevated LDL; ‘‘statin
intolerant’’
combination with
ezetimibe
Placebo controlled,
10 mg atorvastatin
Placebo controlled
. Phase 2 Elevated LDL; T2DM Placebo controlled
Multiple ascending
. Phase 1 Healthy subjects
dose, PK
Placebo controlled
Multiple ascending
dose, PK/PD
Single dose, PK
. Phase 2 Elevated LDL
. Phase 1 Healthy subjects
. Phase 1 Healthy subjects
8 weeks
58 (42)
60, 120, 180, 240 mg
Up to 22%
8 weeks
56 (37)
60, 120, 180, 240 mg
Up to 29%
4 weeks
2 weeks
60 (30)
24 (18)
80, 120 mg
40, 180, 220 mg
12 weeks
2/4 weeks
177 (133)
53 (39)
40, 80, 120 mg
20, 60, 100, 120 mg
Up to 39%
Up to 36%
Up to 25%
Up to 17%
Single dose
18 (18)
2.5, 10, 45, 125, 250 mg Not applicable
Study
1002-035 .
1002-014 .
1002-009 .
1002-008 .
1002-007 .
1002-006 .
1002-005 .
1002-004 .
1002-003 .
1002-002 .
1002-001 .
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Ongoing Clinical Studies
The clinical development program for bempedoic acid consists of two major components: 1) the
global pivotal Phase 3 LDL-C lowering program in high CVD risk patients with hypercholesterolemia
on optimized background lipid-modifying therapy, including maximally tolerated statins, and patients
who are only able to tolerate less than the lowest approved daily starting dose of their statin and are
considered ‘‘statin intolerant,’’ and 2) the CLEAR Outcomes CVOT in patients with
hypercholesterolemia and high CVD risk and who are considered ‘‘statin intolerant’’.
Global regulatory submissions for an LDL-C lowering indication are expected by the first half of
2019 for a New Drug Application, or NDA, to the FDA and a Marketing Authorization Application, or
MAA, to the European Medicines Agency, or EMA. The Company expects to submit a NDA for
cardiovascular risk reduction to the FDA and a MAA to the EMA, on the basis of a successful
completion of the CLEAR Outcomes CVOT by 2022.
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Study 1—Global pivotal Phase 3 long-term safety and tolerability study in patients with
hypercholesterolemia on maximally tolerated background lipid-modifying therapy
Study 1 is a 52-week global pivotal Phase 3 randomized, double-blind, placebo-controlled study
evaluating the long-term safety and tolerability of 180 mg of bempedoic acid versus placebo in patients
with ASCVD and/or HeFH at high CVD risk whose LDL-C is not adequately controlled with current
lipid-modifying therapies. At initiation the study included 900 patients but was expanded to
approximately 2,000 patients to further support our regulatory submissions for an LDL-C lowering
indication expected in the first half of 2019. The study enrolled patients at approximately 100 sites in
the U.S., Canada and Europe. The primary objective is to assess safety and tolerability of patients
treated with bempedoic acid for 52 weeks. Secondary objectives include assessing the LDL-C lowering
efficacy of bempedoic acid on top of maximally tolerated statin and other lipid altering therapies at 12,
24 and 52 weeks versus placebo. Effects on other risk markers, including non-high-density lipoprotein,
or non-HDL-C, total cholesterol, apolipoprotein B, or apoB, and hsCRP, will also be evaluated. We
initiated Study 1 in January 2016, and completed patient enrollment ahead of schedule in January 2017.
We expect to report top-line results in the second quarter of 2018.
Additional safety data will be obtained from an open-label extension study which will enroll
approximately 1,300 patients of the approximately 2,000 patients originally enrolled in Study 1. This
open-label extension study will evaluate the long-term safety of 180 mg of bempedoic acid versus
placebo in patients with hypercholesterolemia with ASCVD and/or HeFH on maximally tolerated
background lipid-modifying therapies, including patients on any statin at any dose. 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.
Study 2—Global pivotal Phase 3 safety and efficacy study in patients with hypercholesterolemia not
adequately controlled with current lipid-modifying therapy
Study 2 is a 52-week global pivotal Phase 3 randomized, double-blind, placebo-controlled study
evaluating the safety and efficacy of 180 mg of bempedoic acid versus placebo. This study is expected
to enroll 750 patients with hypercholesterolemia (with ASCVD and/or HeFH) at high CVD risk and
whose LDL-C is not adequately controlled with current lipid-modifying therapies. The study will be
conducted at approximately 125 sites in the U.S., Canada and Europe. The primary objective is to
assess the 12-week LDL-C lowering efficacy of patients treated with bempedoic acid versus placebo.
Secondary objectives include evaluating the 24-week LDL-C lowering efficacy, and 52-week safety and
tolerability of bempedoic acid versus placebo. Effects on other risk markers, including non-HDL-C,
total cholesterol, apoB, and hsCRP, will also be evaluated. We initiated Study 2 in December 2016, and
expect to report top-line results by mid-2018.
Study 3—Global pivotal Phase 3 safety and efficacy study in patients with hypercholesterolemia on
optimized background lipid-modifying therapy, including patients considered ‘‘statin intolerant’’
Study 3 is a 24-week global pivotal Phase 3 randomized, double-blind, placebo-controlled study
evaluating the safety and efficacy of 180 mg of bempedoic acid versus placebo. This study is expected
to enroll 300 patients with hypercholesterolemia on optimized background lipid-modifying therapy,
including patients considered ‘‘statin intolerant.’’ The study will be conducted at approximately 70 sites
in the U.S. and Canada. The primary objective is to assess the 12-week LDL-C lowering efficacy of
patients treated with bempedoic acid versus placebo. Secondary objectives include evaluating the
24-week LDL-C lowering efficacy, safety and tolerability of bempedoic acid versus placebo and effects
15
on other risk markers, including non-HDL-C, total cholesterol, apoB and hsCRP. We initiated Study 3
in December 2016, and expect to report top-line results by mid-2018.
Study 4—Global pivotal Phase 3 safety and efficacy study in patients with hypercholesterolemia on
optimized background lipid-modifying therapy, including ezetimibe, and patients considered ‘‘statin
intolerant’’
Study 4 is a 12-week global pivotal Phase 3 randomized, double-blind, placebo-controlled study
evaluating the safety and efficacy of 180 mg of bempedoic acid versus placebo as an add-on to 10 mg
of ezetimibe. This study is expected to enroll 225 patients with hypercholesterolemia on optimized
background lipid-modifying therapy, including ezetimibe, and patients considered ‘‘statin intolerant.’’
The study will be conducted at approximately 75 sites in the U.S., Canada and Europe. The primary
objective is to assess the 12-week LDL-C lowering efficacy of patients treated with bempedoic acid
versus placebo when added to ezetimibe. Secondary objectives include evaluating safety and tolerability
of bempedoic acid when added to ezetimibe, and effects on other risk markers, including non-HDL-C,
total cholesterol, apoB and hsCRP. We initiated Study 4 in December 2016, and expect to report
top-line results by mid-2018.
Global Cardiovascular Outcomes Trial—CLEAR Outcomes
CLEAR Outcomes is an event driven, global, randomized, double-blind, placebo-controlled study
to assess the effects of bempedoic acid in patients with hypercholesterolemia who are at high risk of
CVD and who are only able to tolerate less than the lowest approved starting dose of a statin and can
be considered ‘‘statin intolerant’’. The CLEAR Outcomes CVOT is expected to enroll approximately
12,600 patients with hypercholesterolemia and high CVD risk at more than 600 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 3.5 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 between 100 mg/dL and
190 mg/dL despite background lipid-lowering therapy, resulting in an expected average baseline LDL-C
level in all patients of approximately 135 mg/dL. 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, hospitalization for
unstable angina, or coronary revascularization; also referred to as ‘‘five-component MACE’’). We
initiated CLEAR Outcomes in December 2016, and the study is intended to support our submissions
for a CV risk reduction indication in the U.S. and Europe by 2022.
Research and Development Expenses
Research and development expenses for the year ended December 31, 2016, were $57.9 million.
Sales and Marketing
Given our stage of development, we have not yet established a commercial organization or
distribution capabilities, nor have we entered into any partnership or co-promotion arrangements with
an established pharmaceutical company. To develop the appropriate commercial infrastructure to
launch bempedoic acid in the United States, if approved, as a treatment for patients with elevated
LDL-C, we would need to invest significant financial and managerial resources. We may engage in
partnering discussions with third parties from time to time. If we elect to seek approval and launch
commercial sales of bempedoic acid outside of the United States or for broader patient populations in
the United States, including ‘‘statin intolerant’’ patients who are unable to reach their LDL-C goal with
a statin therapy, we may either do so on our own or by establishing alliances with one or more
16
pharmaceutical company collaborators, depending on, among other things, the applicable indications,
the related development costs and our available resources.
Manufacturing and Supply
Bempedoic acid is a small molecule drug that is synthesized from readily available raw materials
using conventional chemical processes. We currently have no manufacturing facilities and limited
personnel with manufacturing experience. We rely on contract manufacturers to produce both drug
substances and drug products required for our clinical studies. All lots of drug substance and drug
product used in clinical studies are manufactured under current good manufacturing practices. We plan
to continue to rely upon contract manufacturers and, potentially, collaboration partners to manufacture
commercial quantities of bempedoic acid, if approved.
Licenses
In April 2008, we entered into an agreement with Pfizer pursuant to which we acquired a
worldwide, exclusive, fully paid-up license from Pfizer to certain patent rights owned or controlled by
Pfizer relating to bempedoic acid, and we granted Pfizer a worldwide, exclusive, fully paid-up license to
certain patent rights owned or controlled by us relating to development programs other than
bempedoic acid. The license to us covers the development, manufacture and commercialization of
bempedoic acid. We may grant sublicenses under the license. Under the license agreement, Pfizer is
restricted from making, using, developing or testing any of the compounds claimed under the same
patents that claim or cover the composition of matter of bempedoic acid. Neither party is entitled to
any royalties, milestones or any similar development or commercialization payments under the license
agreement, and the licenses granted are irrevocable and may not be terminated for any cause, including
intentional breaches or breaches caused by gross negligence.
Intellectual Property
We strive to protect and enhance the proprietary technologies that we believe are important to our
business, including seeking and maintaining patents intended to cover our products and compositions,
their methods of use and any other inventions that are important to the development of our business.
We also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do
not consider appropriate for, patent protection.
Our success will depend significantly on our ability to obtain and maintain patent and other
proprietary protection for commercially important technology, inventions and know-how related to our
business, defend and enforce our patents, preserve the confidentiality of our trade secrets and operate
without infringing the valid and enforceable patents and proprietary rights of third parties. We also rely
on know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen
and maintain the proprietary position of bempedoic acid and our other development programs.
As of December 31, 2016, our patent estate, including patents we own or license from third
parties, on a worldwide basis, included approximately 25 issued United States patents and four pending
United States patent applications and 23 issued patents and 15 pending patent applications in other
foreign jurisdictions. Of our worldwide patents and pending applications, only a subset relates to our
small molecule program which includes our lead product candidate, bempedoic acid. Bempedoic acid is
claimed in U.S. Patent No. 7,335,799 that is scheduled to expire in December 2025, which includes
711 days of patent term adjustment, and may be eligible for a patent term extension period of up to
five years. U.S. Patent Nos. 9,000,041 and 8,497,301 claim methods of treatment using bempedoic acid.
We also have a pending U.S. patent application directed to bempedoic acid. There are currently three
issued patents and four pending application in countries outside the United States that relate to
bempedoic acid.
17
A subset of this portfolio relates to our planned fixed dose combination of bempedoic acid and
ezetimibe and bempedoic acid and one or more statins. We have one pending application outside the
United States claiming methods of treatment using a fixed dose combination of bempedoic acid and
ezetimibe. We have one pending application outside the United States claiming methods of treatment
using a fixed dose combination of bempedoic acid and one or more statins.
We hold an exclusive, worldwide, fully paid-up license from Pfizer to additional patents and patent
applications.
The term of individual patents depends upon the legal term of the patents in the countries in
which they are obtained. In most countries in which we file, the patent term is 20 years from the date
of filing the non-provisional application. In the United States, a patent’s term may be lengthened by
patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and
Trademark Office in granting a patent, or may be shortened if a patent is terminally disclaimed over an
earlier-filed patent. In addition, in certain instances, a patent term can be extended to recapture a
portion of the term effectively lost as a result of the FDA regulatory review period. However, the
restoration period cannot be longer than five years and the total patent term including the restoration
period must not exceed 14 years following FDA approval. The duration of foreign patents varies in
accordance with provisions of applicable local law, but typically is also twenty years from the earliest
effective filing date. Our issued U.S. patents will expire on dates ranging from 2021 to 2030. However,
the actual protection afforded by a patent varies on a claim by claim basis for each applicable product,
from country to country and depends upon many factors, including the type of patent, the scope of its
coverage, the availability of regulatory related extensions, the availability of legal remedies in a
particular country and the validity and enforceability of the patent.
Furthermore, the patent positions of biotechnology and pharmaceutical products and processes like
those we intend to develop and commercialize are generally uncertain and involve complex legal and
factual questions. No consistent policy regarding the breadth of claims allowed in such patents has
emerged to date in the U.S. The patent situation outside the U.S. is even more uncertain. Changes in
either the patent laws or in interpretations of patent laws in the U.S. and other countries can diminish
our ability to protect our inventions, and enforce our intellectual property rights and more generally,
could affect the value of intellectual property. Accordingly, we cannot predict the breadth of claims that
may be allowed or enforced in our patents or in third-party patents.
The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding
patents and other intellectual property rights. Our ability to maintain and solidify our proprietary
position for our drugs and technology will depend on our success in obtaining effective claims and
enforcing those claims once granted. We do not know whether any of the patent applications that we
may file or license from third parties will result in the issuance of any patents. The issued patents that
we own or may receive in the future, may be challenged, invalidated or circumvented, and the rights
granted under any issued patents may not provide us with proprietary protection or competitive
advantages against competitors with similar technology. Furthermore, our competitors may be able to
independently develop and commercialize similar drugs or duplicate our technology, business model or
strategy without infringing our patents. Because of the extensive time required for clinical development
and regulatory review of a drug we may develop, it is possible that, before any of our drugs can be
commercialized, any related patent may expire or remain in force for only a short period following
commercialization, thereby reducing any advantage of any such patent.
As a result of the America Invents Act of 2011, the United States transitioned to a first-
inventor-to-file system in March 2013, under which, assuming the other requirements for patentability
are met, the first inventor to file a patent application will be entitled to the patent. This will require us
to minimize the time from invention to the filing of a patent application.
18
We may rely, in some circumstances, on trade secrets and unpatented know-how to protect our
technology. However, trade secrets can be difficult to protect. We seek to protect our proprietary
technology and processes, in part, by entering into confidentiality agreements with our consultants,
scientific advisors and contractors and invention assignment agreements with our employees. We also
seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical
security of our premises and physical and electronic security of our information technology systems.
While we have confidence in these individuals, organizations and systems, agreements or security
measures may be breached and we may not have adequate remedies for any breach. In addition, our
trade secrets may otherwise become known or be independently discovered by competitors. To the
extent that our consultants, contractors or collaborators use intellectual property owned by others in
their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
For more information, please see ‘‘Risk Factors—Risks Related to our Intellectual Property.’’
Our commercial success will also depend in part on not infringing the proprietary rights of third
parties. It is uncertain whether the issuance of any third-party patent would require us to alter our
development or commercial strategies, or our drugs or processes, obtain licenses or cease certain
activities. Our breach of any license agreements or failure to obtain a license to proprietary rights that
we may require to develop or commercialize our future drugs may have a material adverse impact on
us. If third parties prepare and file patent applications in the U.S. that also claim technology to which
we have rights, we may have to participate in interference proceedings in the U.S. Patent and
Trademark Office, or USPTO, to determine priority of invention.
In addition, substantial scientific and commercial research has been conducted for many years in
the areas in which we have focused our development efforts, which has resulted in third parties having
a number of issued patents and pending patent applications. Patent applications in the U.S. and
elsewhere are published only after eighteen months from the priority date. The publication of
discoveries in the scientific or patent literature frequently occurs substantially later than the date on
which the underlying discoveries were made. Therefore, patent applications relating to drugs similar to
bempedoic acid and any future drugs, discoveries or technologies we might develop may have already
been filed by others without our knowledge.
Competition
Our industry is highly competitive and subject to rapid and significant technological change. Our
potential competitors include large pharmaceutical and biotechnology companies, specialty
pharmaceutical and generic drug companies, academic institutions, government agencies and research
institutions. Key competitive factors affecting the commercial success of our product candidates are
likely to be efficacy, safety and tolerability profile, reliability, convenience of dosing, price and
reimbursement.
The market for cholesterol regulating therapies is especially large and competitive. The product
candidates we are currently developing, if approved, will face intense competition, either as
monotherapies or as combination therapies.
Many of our existing or potential competitors have substantially greater financial, technical and
human resources than we do and significantly greater experience in the discovery and development of
product candidates, obtaining FDA and other regulatory approvals of products and the
commercialization of those products. Mergers and acquisitions in the pharmaceutical and biotechnology
industries may result in even more resources being concentrated among a small number of our
competitors. Accordingly, our competitors may be more successful than we may be in obtaining FDA
approval for drugs and achieving widespread market acceptance. Our competitors’ drugs may be more
effective, or more effectively marketed and sold, than any drug we may commercialize and may render
our product candidates obsolete or non-competitive before we can recover the expenses of developing
19
and commercializing any of our product candidates. Our competitors may also obtain FDA or other
regulatory approval for their products more rapidly than we may obtain approval for ours. We
anticipate that we will face intense and increasing competition as new drugs enter the market and
advanced technologies become available. Finally, the development of new treatment methods for the
diseases we are targeting could render our drugs non-competitive or obsolete. See ‘‘Risk Factors—Risks
Related to our Business and the Clinical Development and Commercialization of Bempedoic
Acid—Our market is subject to intense competition. If we are unable to compete effectively, our
opportunity to generate revenue from the sale of bempedoic acid, if approved, will be materially
adversely affected.’’
Regulatory Matters
Government Regulation and Product Approval
Government authorities in the United States at the federal, state and local level, and other
countries, extensively regulate, among other things, the research, development, testing, manufacture,
quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising,
distribution, marketing, export and import of products such as those we are developing. Our product
candidates, including bempedoic acid, must be approved by the FDA through the NDA process before
they may legally be marketed in the United States.
United States Drug Development Process
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act,
or FDCA, and implementing regulations. The process of obtaining regulatory approvals and compliance
with appropriate federal, state, local and foreign statutes and regulations require the expenditure of
substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any
time during the product development process, approval process, or after approval, may subject an
applicant to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to
approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product
recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines,
refusals of government contracts, restitution, disgorgement or civil or criminal penalties. The process
required by the FDA before a drug may be marketed in the United States generally involves the
following:
• completion of nonclinical laboratory tests, animal studies and formulation studies according to
Good Laboratory Practices regulations;
• submission to the FDA of an IND, which must become effective before human clinical studies
may begin;
• performance of adequate and well-controlled human clinical studies according to Good Clinical
Practices, or GCP, to establish the safety and efficacy of the proposed drug for its intended use;
• submission to the FDA of an NDA for a new drug;
• satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which
the drug is produced to assess compliance with cGMP; and
• FDA review and approval of the NDA.
The testing and approval process requires substantial time, effort and financial resources and we
cannot be certain that any approvals for our product candidates will be granted on a timely basis, if at
all.
20
Once a pharmaceutical product candidate is identified for development, it enters the nonclinical,
also referred to as preclinical, testing stage. Nonclinical tests include laboratory evaluations of product
chemistry, toxicity, formulation and stability, as well as animal studies. An IND sponsor must submit
the results of the nonclinical tests, together with manufacturing information, analytical data and any
available clinical data or literature, to the FDA as part of the IND. The sponsor must also include a
protocol detailing, among other things, the objectives of the initial clinical study, the parameters to be
used in monitoring safety and the effectiveness criteria to be evaluated if the initial clinical study lends
itself to an efficacy evaluation. Some nonclinical testing may continue even after the IND is submitted.
The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the
clinical study on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the
FDA must resolve any outstanding concerns before the clinical study can begin. Clinical holds also may
be imposed by the FDA at any time before or during clinical studies due to safety concerns or
non-compliance, and may be imposed on all drug products within a certain class of drugs. The FDA
also can impose partial clinical holds, for example prohibiting the initiation of clinical studies of a
certain duration or for a certain dose.
All clinical studies must be conducted under the supervision of one or more qualified investigators
in accordance with GCP regulations. These regulations include the requirement that all research
subjects provide informed consent. Further, an institutional review board, or IRB, must review and
approve the plan for any clinical study before it commences at any institution. An IRB considers,
among other things, whether the risks to individuals participating in the clinical study are minimized
and are reasonable in relation to anticipated benefits. The IRB also approves the information regarding
the clinical study and the consent form that must be provided to each clinical study subject or his or
her legal representative and must monitor the clinical study until completed.
Each new clinical protocol and any amendments to the protocol must be submitted to the IND for
FDA review, and to the IRBs for approval. Protocols detail, among other things, the objectives of the
clinical study, dosing procedures, subject selection and exclusion criteria, and the parameters to be used
to monitor subject safety.
Human clinical studies are typically conducted in three sequential phases that may overlap or be
combined:
• Phase 1. The product is initially introduced into healthy human subjects and tested for safety,
dosage tolerance, absorption, metabolism, distribution and excretion. In the case of some
products for severe or life- threatening diseases, especially when the product may be too
inherently toxic to ethically administer to healthy volunteers, the initial human testing may be
conducted in patients.
• Phase 2. Involves clinical studies in a limited patient population to identify possible adverse
effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted
diseases and to determine dosage tolerance and optimal dosage and schedule.
• Phase 3. Clinical studies are undertaken to further evaluate dosage, clinical efficacy and safety in
an expanded patient population at geographically dispersed clinical study sites. These clinical
studies are intended to establish the overall risk/benefit ratio of the product and provide an
adequate basis for product labeling.
Progress reports detailing the results of the clinical studies must be submitted at least annually to
the FDA and safety reports must be submitted to the FDA and the investigators for serious and
unexpected adverse events. Phase 1, Phase 2 and Phase 3 testing may not be completed successfully
within any specified period, if at all. The FDA or the sponsor may suspend or terminate a clinical study
at any time on various grounds, including a finding that the research subjects or patients are being
exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a
21
clinical study at its institution if the clinical study is not being conducted in accordance with the IRB’s
requirements or if the drug has been associated with unexpected serious harm to patients.
Concurrent with clinical studies, companies usually complete additional animal studies and must
also develop additional information about the chemistry and physical characteristics of the product and
finalize a process for manufacturing the product in commercial quantities in accordance with cGMP
requirements. The manufacturing process must be capable of consistently producing quality batches of
the product candidate and, among other things, the manufacturer must develop methods for testing the
identity, strength, quality and purity of the final product. Additionally, appropriate packaging must be
selected and tested and stability studies must be conducted to demonstrate that the product candidate
does not undergo unacceptable deterioration over its shelf life.
U.S. Review and Approval Processes
The results of product development, nonclinical studies and clinical studies, along with descriptions
of the manufacturing process, analytical tests conducted on the drug, proposed labeling and other
relevant information, are submitted to the FDA as part of an NDA for a new drug, requesting approval
to market the product. The submission of an NDA is subject to the payment of a substantial user fee; a
waiver of such fee may be obtained under certain limited circumstances. For example, the agency will
waive the application fee for the first human drug application that a small business or its affiliate
submits for review.
In addition, under the Pediatric Research Equity Act of 2003, or PREA, made into permanent law
pursuant to Food and Drug Administration Safety and Innovation Act (FDASIA), an NDA or
supplement to an NDA must contain data to assess the safety and effectiveness of the drug for the
claimed indications in all relevant pediatric subpopulations and to support dosing and administration
for each pediatric subpopulation for which the product is safe and effective. The FDA may grant
deferrals for submission of data or full or partial waivers.
The FDA reviews all NDAs submitted to ensure that they are sufficiently complete for substantive
review before it accepts them for filing. The FDA may request additional information rather than
accept an NDA for filing. In this event, the NDA must be re-submitted with the additional information.
The re-submitted application also is subject to review before the FDA accepts it for filing. Once the
submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an
NDA to determine, among other things, whether a product is safe and effective for its intended use
and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity,
strength, quality and purity. Before approving an NDA, the FDA will inspect the facility or facilities
where the product is manufactured. The FDA will not approve an application unless it determines that
the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to
assure consistent production of the product within required specifications. The FDA also can require,
or an NDA applicant may voluntarily propose, a Risk Evaluation and Mitigation Strategy, or REMS, to
ensure the benefits of a drug outweigh its risks. Elements of a REMS may include ‘‘dear doctor
letters,’’ a medication guide, and in some cases restrictions on distribution. These elements are
negotiated as part of the NDA approval, and in some cases may delay the approval date. Once
adopted, REMS are subject to periodic assessment and modification. The FDA may refer the NDA to
an advisory committee for review, evaluation and recommendation as to whether the application should
be approved and under what conditions. An advisory committee is a panel of experts who provide
advice and recommendations when requested by the FDA on matters of importance that come before
the agency. The FDA is not bound by the recommendation of an advisory committee.
The approval process is lengthy and difficult and the FDA may refuse to approve an NDA if the
applicable regulatory criteria are not satisfied or may require additional clinical data or other data and
information. Even if such data and information are submitted, the FDA may ultimately decide that the
22
NDA does not satisfy the criteria for approval. Data obtained from clinical studies are not always
conclusive and the FDA may interpret data differently than we interpret the same data. The FDA will
issue a complete response letter if the agency decides not to approve the NDA in its present form. The
complete response letter usually describes all of the specific deficiencies that the FDA identified in the
NDA. The deficiencies identified may be minor, for example, requiring labeling changes, or major, for
example, requiring additional clinical studies. Additionally, the complete response letter may include
recommended actions that the applicant might take to place the application in a condition for approval.
If a complete response letter is issued, the applicant may either resubmit the NDA, addressing all of
the deficiencies identified in the letter, or withdraw the application or request an opportunity for a
hearing.
If a product receives regulatory approval, the approval may be significantly limited to specific
patient populations, therapeutic settings, risk categories of disease, and dosages or the indications for
use may otherwise be limited, which could restrict the commercial value of the product. Further, the
FDA may require that certain contraindications, warnings or precautions be included in the product
labeling. In addition, the FDA may require further Phase 3 and Phase 4 testing to be conducted, which
involves clinical studies designed to further assess a drug’s safety and effectiveness after NDA approval
and may require testing and surveillance programs to monitor the safety of approved products that
have been commercialized.
Patent Term Restoration and Marketing Exclusivity
Depending upon the timing, duration and specifics of FDA approval of the use of our product
candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug
Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-
Waxman Act. The Hatch-Waxman Act permits a patent restoration term of up to five years as
compensation for patent term lost during product development and the FDA regulatory review process.
However, patent term restoration cannot extend the remaining term of a patent beyond a total of
14 years from the product’s approval date. The patent term restoration period is generally one-half the
time between the effective date of an IND and the submission date of an NDA plus the time between
the submission date of an NDA and the approval of that application. Only one patent applicable to an
approved drug is eligible for the extension and the application for the extension must be submitted
prior to the expiration of the patent. The U.S. Patent and Trademark Office, in consultation with the
FDA, reviews and approves the application for any patent term extension or restoration. In the future,
we intend to apply for restorations of patent term for some of our currently owned or licensed patents
to add patent life beyond their current expiration dates, depending on the expected length of the
clinical studies and other factors involved in the filing of the relevant NDA, however there can be no
assurance that any such extension will be granted to us.
Market exclusivity provisions under the FDCA can also delay the submission or the approval of
certain applications. The FDCA provides a five-year period of non-patent marketing exclusivity within
the United States to the first applicant to gain approval of an NDA for a new chemical entity. A drug
is a new chemical entity if the FDA has not previously approved any other new drug containing the
same active moiety, which is the molecule or ion responsible for the action of the drug substance.
During the exclusivity period, the FDA may not accept for review an abbreviated new drug application,
or ANDA, or a 505(b)(2) NDA submitted by another company for another version of such drug where
the applicant does not own or have a legal right of reference to all the data required for approval.
However, an application may be submitted after four years if it contains a certification of patent
invalidity or non-infringement. The FDCA also provides three years of marketing exclusivity for an
NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than
bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to
be essential to the approval of the application, for example new indications, dosages or strengths of an
23
existing drug. This three-year exclusivity covers only the conditions of use associated with the new
clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the
original active agent. Five-year and three-year exclusivity will not delay the submission or approval of a
full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right
of reference to all of the nonclinical studies and adequate and well- controlled clinical studies necessary
to demonstrate safety and effectiveness.
Pediatric exclusivity is another type of exclusivity in the United States. Pediatric exclusivity, if
granted, provides an additional six months to an existing exclusivity or statutory delay in approval
resulting from a patent certification. This six-month exclusivity, which runs from the end of other
exclusivity protection or patent delay, may be granted based on the voluntary completion of a pediatric
clinical study in accordance with a FDA-issued ‘‘Written Request’’ for such a clinical study.
Certain foreign countries permit extension of patent term for a newly approved drug and/or grant
a period of data exclusivity and/or market exclusivity. For example, depending upon the timing and
duration of the marketing authorization process in certain European countries, a newly approved drug
may be eligible for a supplementary protection certification, or SPC, which can extend the basic patent
right for the drug for a period up to five years.
Post-Approval Requirements
Any drugs for which we receive FDA approval are subject to continuing regulation by the FDA,
including, among other things, record-keeping requirements, reporting of adverse experiences with the
product, providing the FDA with updated safety and efficacy information, product sampling and
distribution requirements, complying with certain electronic records and signature requirements and
complying with FDA promotion and advertising requirements. The FDA strictly regulates labeling,
advertising, promotion and other types of information on products that are placed on the market.
Drugs may be promoted only for the approved indications and in accordance with the provisions of the
approved label. Further, manufacturers of drugs must continue to comply with cGMP requirements,
which are extensive and require considerable time, resources and ongoing investment to ensure
compliance. In addition, changes to the manufacturing process generally require prior FDA approval
before being implemented and other types of changes to the approved product, such as adding new
indications and additional labeling claims, are also subject to further FDA review and approval.
Drug manufacturers and other entities involved in the manufacturing and distribution of approved
drugs are required to register their establishments with the FDA and certain state agencies, and are
subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with
cGMP and other laws. The cGMP requirements apply to all stages of the manufacturing process,
including the production, processing, sterilization, packaging, labeling, storage and shipment of the
drug. Manufacturers must establish validated systems to ensure that products meet specifications and
regulatory standards, and test each product batch or lot prior to its release. We rely, and expect to
continue to rely, on third parties for the production of clinical quantities of our product candidates.
Future FDA and state inspections may identify compliance issues at the facilities of our contract
manufacturers that may disrupt production or distribution or may require substantial resources to
correct.
The FDA may withdraw a product approval if compliance with regulatory requirements is not
maintained or if problems occur after the product reaches the market. Later discovery of previously
unknown problems with a product may result in restrictions on the product or even complete
withdrawal of the product from the market. Further, the failure to maintain compliance with regulatory
requirements may result in administrative or judicial actions, such as fines, warning letters, holds on
clinical studies, product recalls or seizures, product detention or refusal to permit the import or export
24
of products, refusal to approve pending applications or supplements, restrictions on marketing or
manufacturing, injunctions or civil or criminal penalties.
From time to time, legislation is drafted, introduced and passed in Congress that could significantly
change the statutory provisions governing the approval, manufacturing and marketing of products
regulated by the FDA. In addition to new legislation, the FDA regulations and policies are often
revised or reinterpreted by the agency in ways that may significantly affect our business and our
product candidates. It is impossible to predict whether further legislative or FDA regulation or policy
changes will be enacted or implemented and what the impact of such changes, if any, may be.
Foreign Regulation
In addition to regulations in the United States, we will be subject to a variety of foreign
regulations governing clinical studies and commercial sales and distribution of our product candidates
to the extent we choose to sell any products outside of the United States. Whether or not we obtain
FDA approval for a product, we must obtain approval of a product by the comparable regulatory
authorities of foreign countries before we can commence clinical studies or marketing of the product in
those countries. The approval process varies from country to country and the time may be longer or
shorter than that required for FDA approval. The requirements governing the conduct of clinical
studies, product licensing, pricing and reimbursement vary greatly from country to country. As in the
United States, post-approval regulatory requirements, such as those regarding product manufacture,
marketing, or distribution would apply to any product that is approved outside the United States.
Employees
As of December 31, 2016, we had 44 full-time employees. Two of our employees have Ph.D.
degrees and three have M.D. degrees. 28 of our employees are engaged in research and development
activities. None of our employees are represented by labor unions or covered by collective bargaining
agreements. We consider our relationship with our employees to be good.
Facilities
Our corporate headquarters are located in Ann Arbor, Michigan where we lease and occupy
approximately 7,900 square feet of office space. We lease and occupy an additional 5,500 square feet of
office space in Ann Arbor, Michigan to support our clinical development operations. We believe our
current facilities will be sufficient to meet our needs until expiration.
Legal Proceedings
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 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 plaintiffs in this lawsuit filed a
motion to alter or amend the judgment.
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,
25
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 our lead product candidate’s path to FDA
approval, and failed to ensure that reliable systems of internal controls were in place at the Company.
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. In light of, among other things, the early stage of the litigation, 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.
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.
Available Information
Our website address is www.esperion.com. Our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge
through the investor relations page of our internet website as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the Securities and Exchange Commission.
Alternatively, these reports may be accessed at the SEC’s website at www.sec.gov.
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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 II, Item 7 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 all of the other information
included or incorporated in this report. If any of the 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.
Risks Related to our Business and the Clinical Development and Commercialization of Bempedoic Acid
We depend almost entirely on the success of one product candidate, bempedoic acid, which only recently
commenced Phase 3 clinical development. We cannot be certain that we will be able to obtain regulatory
approval for, or successfully commercialize, bempedoic acid.
Bempedoic acid and BA + EZ, the fixed dose combination of bempedoic acid and ezetimibe, are
our only product candidates in clinical development, and our business depends almost entirely on
bempedoic acid’s successful clinical development, regulatory approvals and commercialization. We
currently have no drug products for sale and may never be able to develop marketable drug products.
Bempedoic acid, for which we recently launched our global pivotal Phase 3 clinical program in January
2016, will require substantial additional clinical development, testing, and regulatory approvals before
we are permitted to commence its commercialization. The clinical studies of our product candidates
are, and the manufacturing and marketing of our product candidates will be, subject to extensive and
rigorous review and regulation by numerous government authorities in the U.S. and in other countries
where we intend to test and, if approved, market any product candidate. Before obtaining regulatory
approvals for the commercial sale of any product candidate, we must demonstrate through preclinical
testing and clinical studies that the product candidate is safe and effective for use in each target
indication. This process can take many years and require the expenditure of substantial resources
beyond the proceeds we have raised, and may include post-marketing studies and surveillance, including
a Risk Evaluation and Mitigation Strategy, or REMS program. Of the large number of drugs in
development in the U.S., only a small percentage successfully complete the approval process at the
FDA, EMA or any other foreign regulatory agency, and are commercialized. Accordingly, even if we
are able to obtain the requisite financing to continue to fund our development and clinical programs,
we cannot assure you that bempedoic acid or any other of our product candidates will be successfully
developed or commercialized.
We are not permitted to market bempedoic acid in the U.S. or Europe until we receive approval
of a NDA from the FDA, a MAA from the EMA, or in any other foreign countries until we receive
the requisite approval from such countries. As a condition to submitting an NDA to the FDA or an
MAA to EMA for bempedoic acid to treat patients with elevated LDL-C, we have currently completed
eight Phase 2 clinical studies and expect to complete the global pivotal Phase 3 LDL-C lowering
efficacy and safety studies, and to potentially complete, the CLEAR Outcomes CVOT.
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Additionally, while we currently intend to submit our NDA for bempedoic acid for an LDL-C
lowering indication in patients with hypercholesterolemia, the FDA has indicated its position regarding
an LDL-C lowering indication could be impacted by potential future changes in their view of LDL-C
lowering as a surrogate endpoint or the possibility of a shift in the future standard-of-care for ‘‘statin
intolerant’’ patients with elevated LDL-C levels. In the event that FDA determines LDL-C lowering is
no longer a surrogate endpoint for initial approval of bempedoic acid in the future, we would plan to
submit our NDA with a proposed indication of CV risk reduction in ‘‘statin intolerant’’ patients on the
basis of a completed and successful CLEAR Outcomes CVOT, which would include the results of the
global pivotal Phase 3 LDL-C lowering efficacy and safety studies, by 2022. Obtaining approval of an
NDA is a complex, lengthy, expensive and uncertain process, and the FDA may delay, limit or deny
approval of bempedoic acid for many reasons, including, among others:
• the FDA, EMA or any other regulatory authorities may change their approval policies or adopt
new regulations, including with respect to whether LDL-C lowering is a surrogate endpoint for
initial approval of bempedoic acid;
• we may not be able to demonstrate that bempedoic acid is safe and effective in treating patients
with elevated LDL-C to the satisfaction of the FDA, EMA or any other regulatory agency;
• the results of our clinical studies may not meet the level of statistical or clinical significance
required by the FDA or EMA for marketing approval;
• the magnitude of the treatment effect must also be clinically meaningful along with the drug’s
safety for a favorable benefit/risk assessment by the FDA, EMA or any other regulatory agency;
• the FDA, EMA or any other regulatory agency may disagree with the number, design, size,
duration, exposure of patients, or conduct or implementation of our clinical studies;
• the FDA, EMA or any other regulatory agency may require that we conduct additional clinical
studies;
• the FDA, EMA or any other regulatory agency may not approve the formulation, specifications
or labeling of bempedoic acid;
• the clinical research organizations, or CROs, that we retain to conduct our clinical studies may
take actions outside of our control that materially adversely impact our clinical studies;
• the FDA, EMA or any other regulatory agency may find the data from preclinical studies and
clinical studies insufficient to demonstrate that bempedoic acid’s clinical and other benefits
outweigh its safety risks;
• the FDA, EMA or any other regulatory agency may disagree with our interpretation of data
from our preclinical studies and clinical studies;
• the FDA, EMA or any other regulatory agency may not accept data generated at our clinical
study sites;
• if our NDA, if and when submitted, is reviewed by an advisory committee, the FDA may have
difficulties scheduling an advisory committee meeting in a timely manner or the advisory
committee may recommend against approval of our application or may recommend that the
FDA require, as a condition of approval, additional preclinical studies or clinical studies,
limitations in approved labeling or distribution and use restrictions;
• the FDA, EMA or any other regulatory agency may require the development of a REMS as a
condition of approval or post-approval; or
• the FDA, EMA or any other regulatory agency may not approve the manufacturing processes or
facilities of third-party manufacturers with which we contract.
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Any of these factors, many of which are beyond our control, could jeopardize our ability to obtain
regulatory approval for and successfully market bempedoic acid. Moreover, because our business is
almost entirely dependent upon this one product candidate, any setback in our pursuit of its regulatory
approval would have a material adverse effect on our business and prospects.
The development and approvals required for the approval of BA + EZ, which is in development
for the same indications as bempedoic acid as monotherapy, are substantially identical to those for
bempedoic acid as monotherapy, and the risks relating to the clinical development and approval of
bempedoic acid monotherapy apply equally to BA + EZ. The FDA only recently accepted our
submission of an IND application for BA + EZ in the second quarter of 2016 and we recently
completed a bioavailability study. A formulation of BA + EZ has been selected for development and
commercialization. We expect to announce clinical development and regulatory plans for BA + EZ in
the first half of 2017. Any failure in our development of bempedoic acid monotherapy would materially
and adversely affect our ability to develop, seek approval for and commercialize the BA + EZ
combination therapy for the targeted indications. In addition, even if bempedoic acid monotherapy
succeeds in its clinical development and is approved for one or more targeted indications, there can be
no assurance that the BA + EZ combination therapy would be developed successfully and approved
for the same indications or at all.
Failures or delays in the completion of our global pivotal Phase 3 efficacy and safety studies or our CLEAR
Outcomes CVOT of bempedoic acid could result in increased costs to us and could delay, prevent or limit our
ability to generate revenue and continue our business.
In January 2016, we commenced our global pivotal Phase 3 long-term safety study (Study 1). We
do not know whether our ongoing clinical studies will be completed on schedule, if at all. We initiated
our three remaining global pivotal Phase 3 LDL-C lowering efficacy studies and the CLEAR Outcomes
CVOT in December 2016. We do not know whether these studies will be completed on schedule.
Successful completion of such clinical studies and, if required by the FDA due to a change in
regulatory policy, our CLEAR Outcomes CVOT, are likely prerequisites to submitting an initial NDA
to the FDA, MAA to the EMA or a similar application to any other foreign regulatory authorities from
whom we seek to obtain approval and, consequently, the ultimate approval and commercialization of
bempedoic acid. The commencement and completion of clinical studies can be delayed or prevented for
a number of reasons, including, among others:
• the FDA, EMA or any other regulatory authority may not agree to the study design or overall
program;
• the FDA, EMA or any other regulatory authority may place a clinical study on hold;
• delays in reaching or failing to reach agreement on acceptable terms with prospective CROs and
study sites, the terms of which can be subject to extensive negotiation and may vary significantly
among different CROs and study sites;
• inadequate quantity or quality of a product candidate or other materials necessary to conduct
clinical studies;
• difficulties or delays obtaining institutional review board, or IRB, approval to conduct a clinical
study at a prospective site or sites;
• challenges in recruiting and enrolling patients to participate in clinical studies or in our CLEAR
Outcomes CVOT, including the size and nature of the patient population, the proximity of
patients to clinical sites, eligibility criteria for the clinical study, the nature of the clinical study
protocol, the availability of approved effective treatments for the relevant disease and
competition from other clinical study programs, including PCSK9 inhibitors, for similar
indications;
29
• severe or unexpected drug-related side effects experienced by patients in a clinical study,
including instances of muscle pain or weakness or other side effects previously identified in our
completed clinical studies;
• reports from preclinical or clinical testing of other cardiometabolic therapies that raise safety or
efficacy concerns; and
• difficulties retaining patients who have enrolled in a clinical study but may be prone to withdraw
due to rigors of the study, lack of efficacy, side effects, personal issues or loss of interest.
Clinical studies may also be delayed or terminated as a result of ambiguous or negative interim
results. In addition, a clinical study may be suspended or terminated by us, the FDA, the EMA, the
IRBs at the sites where the IRBs are overseeing a clinical study, a data safety monitoring board, or
DSMB, overseeing the clinical study at issue or any other regulatory authorities due to a number of
factors, including, among others:
• failure to conduct the clinical study in accordance with regulatory requirements or our clinical
protocols;
• inspection of the clinical study operations or study sites by the FDA, EMA or any other
regulatory authorities that reveals deficiencies or violations that require us to undertake
corrective action, including the imposition of a clinical hold;
• unforeseen safety issues;
• changes in government regulations or administrative actions;
• problems with clinical supply materials; and
• lack of adequate funding to continue the clinical study.
Positive results from completed Phase 1 and Phase 2 clinical studies of bempedoic acid are not necessarily
predictive of the results of our ongoing global pivotal Phase 3 program and CVOT of bempedoic acid, nor do
they guarantee approval of bempedoic acid by the FDA, EMA or any other regulatory agency. If we cannot
replicate the positive results from our completed Phase 1 and Phase 2 clinical studies of bempedoic acid in
our ongoing clinical studies and CVOT, we may be unable to successfully develop, obtain regulatory approval
for and commercialize bempedoic acid.
There is a high failure rate for drugs proceeding through clinical studies. Even if we are able to
complete our ongoing global pivotal Phase 3 LDL-C studies, CVOT and any potential additional
Phase 3 clinical studies of bempedoic acid according to our current development timeline, the positive
results from our completed Phase 1 and Phase 2 clinical studies of bempedoic acid, including those of
our Phase 2 PK/PD (1002-035) study completed in October 2016, may not be replicated in our ongoing
global pivotal Phase 3 and CVOT or planned Phase 3 clinical study results, nor do they guarantee
approval of bempedoic acid by the FDA, EMA or any other regulatory authorities in a timely manner
or at all. Many companies in the pharmaceutical and biotechnology industries have suffered significant
setbacks in late-stage clinical studies after achieving positive results in early stage development, and we
cannot be certain that we will not face similar setbacks. These setbacks have been caused by, among
other things, preclinical findings made while clinical studies were underway or safety or efficacy
observations made in clinical studies, including previously unreported adverse events. In addition,
regulatory delays or rejections may be encountered as a result of many factors, including changes in
regulatory policy during the period of product development.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses,
and many companies that believed their product candidates performed satisfactorily in preclinical
studies and clinical studies nonetheless failed to obtain FDA and/or EMA approval. If we fail to obtain
30
positive results in our ongoing global pivotal Phase 3, CVOT and planned Phase 3 clinical studies of
bempedoic acid, the development timeline and regulatory approval and commercialization prospects for
our leading product candidate, and, correspondingly, our business and financial prospects, would be
materially adversely affected.
We will need substantial additional capital in the future. If additional capital is not available, we will have to
delay, reduce or cease operations.
We reported top-line results from our Phase 2 (1002-008) clinical study in October 2014, our
Phase 2 (1002-009) clinical study in March 2015, our Phase 2 (1002-014) exploratory clinical safety
study in July 2015, and our Phase 2 PK/PD (1002-035) clinical study and Phase 1 PK (1002-037) study
in October 2016. We held our End-of-Phase 2 meeting with the FDA in August 2015. In January 2016,
we commenced our global pivotal Phase 3 long-term safety study (Study 1). We engaged in active
dialogue in 2016 with the FDA and EMA to discuss our global pivotal Phase 3 clinical program for
bempedoic acid in the ‘‘statin intolerant’’ patient population and, based on that dialogue, announced
our clinical development and regulatory plans for bempedoic acid in June 2016. We initiated our global
pivotal Phase 3 LDL-C lowering efficacy studies and our CLEAR Outcomes CVOT in December 2016.
In the event that FDA determines LDL-C lowering is no longer a surrogate endpoint for initial
approval of bempedoic acid in the future, we would plan to submit our NDA for CV risk reduction
indication on the basis of a completed and successful CVOT, which would include the results of the
Phase 3 LDL-C lowering efficacy studies, by 2022. We expect that these clinical studies, plus any
additional clinical studies that we undertake for the clinical development of BA + EZ, will consume
substantial additional financial resources. We expect that our existing cash and cash equivalents only
will be sufficient to fund our operations into early 2019. We will need to raise additional capital to
continue to fund the further development and commercialization of bempedoic acid and our
operations. Our future capital requirements may be substantial and will depend on many factors
including:
• the scope, size, rate of progress, results and costs of completing our CLEAR Outcomes CVOT
of bempedoic acid;
• the scope, size, rate of progress, results and costs of completing our global pivotal Phase 3
LDL-C lowering program of bempedoic acid, which currently includes multiple global pivotal
Phase 3 clinical efficacy and safety studies;
• the scope, size, rate of progress, results and costs of clinical development of BA + EZ for the
same indications as bempedoic acid monotherapy;
• the cost, timing and outcome of our efforts to obtain marketing approval for bempedoic acid,
including to fund the preparation and filing of an NDA with the FDA and a MAA with the
EMA for bempedoic acid and to satisfy related FDA and EMA requirements;
• the number and characteristics of any additional product candidates we develop or acquire;
• the costs associated with commercializing bempedoic acid or any future product candidates if we
receive marketing approval, including the cost and timing of developing sales and marketing
capabilities or entering into strategic collaborations to market and sell bempedoic acid or any
future product candidates;
• the cost of manufacturing bempedoic acid or any future product candidates and any products we
successfully commercialize; and
• the costs associated with general corporate activities, such as the cost of filing, prosecuting and
enforcing patent claims.
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Changing circumstances may cause us to consume capital significantly faster than we currently
anticipate. Because the outcome of any clinical study is highly uncertain, we cannot reasonably estimate
the actual amounts necessary to successfully complete the development, regulatory approval and
commercialization of bempedoic acid and any future product candidates. Additional financing may not
be available when we need it or may not be available on terms that are favorable to us. In addition, we
may seek additional capital due to favorable market conditions or strategic considerations, even if we
believe we have sufficient funds for our current or future operating plans. If adequate funds are
unavailable to us on a timely basis, or at all, we may not be able to continue the development of
bempedoic acid or any future product candidate, or to commercialize bempedoic acid or any future
product candidate, if approved, unless we find a partner.
We are an emerging pharmaceutical company and have not generated any revenue from product sales. We
have incurred significant operating losses since our inception, and anticipate that we will incur continued
losses for the foreseeable future.
We have a limited operating history on which to base your investment decision. Pharmaceutical
product development is a highly speculative undertaking and involves a substantial degree of risk. We
were incorporated in January 2008. Our operations to date have been limited primarily to organizing
and staffing our company and conducting research and development activities for bempedoic acid. We
have never generated any revenue from product sales. We have not obtained regulatory approvals for
any of our product candidates. As such, we are subject to all the risks incident to the development,
regulatory approval and commercialization of new pharmaceutical products and we may encounter
unforeseen expenses, difficulties, complications, delays and other unknown factors.
Since our inception, we have focused substantially all of our efforts and financial resources on
developing bempedoic acid, which commenced Phase 3 clinical development in January 2016. We have
funded our operations to date primarily through proceeds from sales of preferred stock, public
offerings of common stock, convertible promissory notes and warrants and the incurrence of
indebtedness, and we have incurred losses in each year since our inception. Our net losses were
$75.0 million, $49.8 million and $36.4 million for the years ended December 31, 2016, 2015 and 2014,
respectively. As of December 31, 2016, we had an accumulated deficit of $229.2 million. Substantially
all of our operating losses resulted from costs incurred in connection with our development program
and from general and administrative costs associated with our operations. We expect to incur increasing
levels of operating losses over the next several years and for the foreseeable future. Our prior losses,
combined with expected future losses, have had and will continue to have an adverse effect on our
stockholders’ equity and working capital. We expect our research and development expenses to
significantly increase in connection with our additional clinical studies of bempedoic acid, particularly
our Phase 3 program and CLEAR Outcomes CVOT, as well as any clinical studies that we undertake
to develop BA + EZ, and development of any other product candidates we may choose to pursue. In
addition, if we obtain marketing approval for bempedoic acid, we will also incur significant sales,
marketing and outsourced manufacturing expenses. As a public company, we have incurred and will
continue to incur additional costs associated with operating as a public company, particularly now that
we are no longer an ‘‘emerging growth company.’’ As a result, we expect to continue to incur
significant and increasing operating losses for the foreseeable future. Because of the numerous risks
and uncertainties associated with developing pharmaceutical products, we are unable to predict the
extent of any future losses or when we will become profitable, if at all. Even if we do become
profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.
32
Changes in regulatory requirements, FDA or EMA guidance or unanticipated events during our global pivotal
Phase 3 clinical studies or our CVOT of bempedoic acid may occur, which may result in changes to clinical
study protocols or additional clinical study requirements, which could result in increased costs to us and could
delay our development timeline.
Changes in regulatory requirements, FDA or EMA guidance or unanticipated events during our
clinical studies may force us to amend clinical study protocols or the FDA or EMA may impose
additional clinical study requirements. Significant amendments to our clinical study protocols may
require resubmission to the FDA and/or IRBs for review and approval, which may adversely impact the
cost, timing and/or successful completion of these studies. If we experience substantial delays
completing—or if we terminate—any of our global pivotal Phase 3 clinical studies or our CVOT, or if
we are required to conduct additional clinical studies, the commercial prospects for bempedoic acid
may be harmed and our ability to generate product revenue will be delayed.
Even though we completed enrollment of Study 1 ahead of schedule, we may not be able to
identify and enroll the requisite number of patients in the remaining studies in our global pivotal
Phase 3 LDL-C lowering program, our CLEAR Outcomes CVOT or any study that we undertake to
support the development of BA+EZ. Even when we are successful in enrolling patients, we may not
ultimately be able to demonstrate sufficient clinical benefits from bempedoic acid and our failure to do
so may delay or hinder our ability to obtain FDA or EMA approval for bempedoic acid. While we
currently plan to submit an NDA for bempedoic acid for an LDL-C lowering indication in patients with
hypercholesterolemia after initiating our CLEAR Outcomes CVOT, the FDA has indicated its position
regarding an LDL-C lowering indication could be impacted by potential future changes in their view of
LDL-C lowering as a surrogate endpoint or the possibility of a shift in the future standard-of-care for
‘‘statin intolerant’’ patients with elevated LDL-C levels. Conducting our CLEAR Outcomes CVOT will
be costly and time-consuming, and any requirement to complete the CVOT prior to approval of
bempedoic acid would adversely affect our development timeline and financial condition.
Even if we receive marketing approval for bempedoic acid, we may still face future development and regulatory
difficulties.
Even if we receive marketing approval for bempedoic acid, regulatory authorities may still impose
significant restrictions on bempedoic acid’s indicated uses or marketing or impose ongoing
requirements for potentially costly post-approval studies, such as a CVOT. Bempedoic acid will also be
subject to ongoing FDA requirements governing the packaging, storage, labeling, advertising and
promotion of the product, recordkeeping and submission of safety updates and other post-marketing
information. The FDA has significant post-marketing authority, including, for example, the authority to
require labeling changes based on new safety information and to require post-marketing studies or
clinical studies to evaluate serious safety risks related to the use of a drug product. The FDA also has
the authority to require, as part of an NDA or post-approval, the submission of a REMS. Any REMS
required by the FDA may lead to increased costs to assure compliance with post-approval regulatory
requirements and potential requirements or restrictions on the sale of approved products, all of which
could lead to lower sales volume and revenue. The EMA and other foreign regulatory authorities may
impose similar requirements on bempedoic acid as those described above with respect to the FDA.
Manufacturers of drug products and their facilities are subject to continual review and periodic
inspections by the FDA and other regulatory authorities for compliance with current Good
Manufacturing Practices and other regulations. If we or a regulatory agency discover problems with
bempedoic acid, such as adverse events of unanticipated severity or frequency, or problems with the
facility where bempedoic acid is manufactured, a regulatory agency may impose restrictions on
bempedoic acid, the manufacturer or us, including requiring withdrawal of bempedoic acid from the
market or suspension of manufacturing. If we, bempedoic acid or the manufacturing facilities for
33
bempedoic acid fail to comply with applicable regulatory requirements, a regulatory agency may, among
other things:
• issue warning letters or untitled letters;
• seek an injunction or impose civil or criminal penalties or monetary fines;
• suspend or withdraw marketing approval;
• suspend any ongoing clinical studies;
• refuse to approve pending applications or supplements to applications submitted by us;
• suspend or impose restrictions on operations, including costly new manufacturing requirements;
or
• seize or detain products, refuse to permit the import or export of products, or request that we
initiate a product recall.
Even if we receive marketing approval for bempedoic acid in the U.S., we may never receive regulatory
approval to market bempedoic acid outside of the U.S., and vice versa.
In order to market any product outside of the U.S., we must establish and comply with the
numerous and varying efficacy, safety and other regulatory requirements of the countries in which we
intend to market our product. Approval procedures vary among countries and can involve additional
product candidate testing and additional administrative review periods. The time required to obtain
approvals in other countries might differ from that required to obtain FDA approval. The marketing
approval processes in other countries may include all of the risks detailed above regarding FDA
approval in the U.S. as well as other risks, or vice versa. In particular, in many countries outside of the
U.S., products must receive pricing and reimbursement approval before the product can be
commercialized. Obtaining this approval can result in substantial delays in bringing products to market
in such countries. Marketing approval in one country does not ensure marketing approval in another,
but a failure or delay in obtaining marketing approval in one country may have a negative effect on the
regulatory process in others. Failure to obtain marketing approval in other countries or any delay or
other setback in obtaining such approval would impair our ability to commercialize bempedoic acid in
such foreign markets. Any such impairment would reduce the size of our potential market, which could
have a material adverse impact on our business, results of operations and prospects.
Even if we receive marketing approval for bempedoic acid, it may not achieve broad market acceptance, which
would limit the revenue that we generate from its sales.
The commercial success of bempedoic acid, if approved by the FDA or other regulatory
authorities, will depend upon the awareness and acceptance of bempedoic acid among the medical
community, including physicians, patients and healthcare payors. Market acceptance of bempedoic acid,
if approved, will depend on a number of factors, including, among others:
• bempedoic acid’s demonstrated ability to treat ‘‘statin intolerant’’ patients for LDL-C lowering
or CV risk reduction as an add-on for patients already on statin therapy, as compared with other
available therapies;
• the relative convenience and ease of administration of bempedoic acid, including as compared
with other treatments for patients for LDL-C lowering or CV risk reduction;
• the prevalence and severity of any adverse side effects such as muscle pain or weakness;
• limitations or warnings contained in the labeling approved for bempedoic acid by the FDA;
34
• availability of alternative treatments, including a number of competitive therapies already
approved for LDL-C lowering or CV risk reduction, including PCSK9 inhibitors, or expected to
be commercially launched in the near future;
• pricing and cost effectiveness;
• the effectiveness of our sales and marketing strategies;
• our ability to increase awareness of bempedoic acid through marketing efforts;
• our ability to obtain sufficient third-party coverage or reimbursement; and
• the willingness of patients to pay out-of-pocket in the absence of third-party coverage.
If bempedoic acid is approved but does not achieve an adequate level of acceptance by patients,
physicians and payors, we may not generate sufficient revenue from bempedoic acid to become or
remain profitable. Our efforts to educate the medical community and third-party payors about the
benefits of bempedoic acid may require significant resources and may never be successful.
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to
market and sell bempedoic acid, we may not be able to generate any revenue.
We do not currently have an infrastructure for the sales, marketing and distribution of
pharmaceutical products. In order to market bempedoic acid, if approved by the FDA or any other
regulatory body, we must build our sales, marketing, managerial, and other non-technical capabilities or
make arrangements with third parties to perform these services. If we are unable to establish adequate
sales, marketing and distribution capabilities, whether independently or with third parties, or if we are
unable to do so on commercially reasonable terms, our business, results of operations, financial
condition and prospects will be materially adversely affected.
Even if we obtain marketing approval for bempedoic acid, physicians and patients using other LDL-C
lowering therapies may choose not to switch to our product.
Physicians are often reluctant to switch their patients from existing therapies even when new and
potentially more effective, safe or convenient treatments enter the market. In addition, patients often
acclimate to the brand or type of therapy that they are currently taking and do not want to switch
unless their physicians recommend switching products or they are required to switch therapies due to
lack of reimbursement for existing therapies. If physicians or patients are reluctant to switch from
existing therapies to bempedoic acid, if approved, our operating results and financial condition would
be materially adversely affected.
The development and, if approved, commercialization of BA + EZ depends on the availability to and use of
ezetimibe by the target patient of this combination therapy.
BA + EZ is dependent on the continued availability and use of ezetimibe in the marketplace, and
there can be no assurance that the current availability and use of ezetimibe will continue. For example,
changes in standard of care or use patterns of ezetimibe could make our BA + EZ combination
therapy obsolete. In addition, ezetimibe could encounter unexpected results in the future and be
associated with adverse outcomes during long-term use. Finally, the producers of ezetimibe are under
no obligation to continue producing, commercializing or making ezetimibe available to patients, or to
continue producing ezetimibe in any particular quantity, which could prevent our ability to obtain
ezetimibe for use in our planned clinical trials or impact the number of patients taking ezetimibe who
are available to enroll in our clinical trials. For example, such producers may encounter manufacturing
or other production issues and fail to produce enough ezetimibe for us to successfully complete our
35
studies and clinical trials, and this could cause our BA + EZ development program or
commercialization efforts, if BA + EZ is approved, to fail or be significantly delayed.
Guidelines and recommendations published by various organizations may adversely affect the FDA’s review of
bempedoic acid for LDL-C lowering in ‘‘statin intolerant’’ patients or the use or commercial viability of
bempedoic acid, if approved for any indication or patient population.
Government agencies issue regulations and guidelines directly applicable to us and to bempedoic
acid, including guidelines generally relating to therapeutically significant LDL-C levels. In addition,
professional societies, practice management groups, private health or science foundations and other
organizations involved in the research, treatment and prevention of various diseases from time to time
publish guidelines or recommendations to the medical and patient communities. These various sorts of
recommendations may relate to such matters as product usage and use of related or competing
therapies. For example, organizations such as the AHA have made recommendations about therapies in
the cardiovascular therapeutics market. We expect that the FDA’s view of the standard of care for
patients with elevated LDL-C at the time we submit an NDA for our LDL-C-lowering program in
patients with elevated LDL-C will impact the evaluation of such NDA, including how this standard of
care evolves in light of guidelines and recommendations in respect of the use of PCSK9 inhibitors. In
addition, following any approval, we expect that changes to these existing recommendations or other
guidelines advocating alternative therapies could result in decreased use of bempedoic acid, which
would adversely affect our results of operations.
Even if approved, reimbursement policies could limit our ability to sell bempedoic acid.
Market acceptance and sales of bempedoic acid will depend on reimbursement policies and may be
affected by healthcare reform measures. Government authorities and third-party payors, such as private
health insurers and health maintenance organizations, decide which medications they will pay for and
establish reimbursement levels for those medications. Cost containment is a primary concern in the
U.S. healthcare industry and elsewhere. Government authorities and these third-party payors have
attempted to control costs by limiting coverage and the amount of reimbursement for particular
medications. We cannot be sure that reimbursement will be available for bempedoic acid and, if
reimbursement is available, the level of such reimbursement. Reimbursement may impact the demand
for, or the price of, bempedoic acid. If reimbursement is not available or is available only at limited
levels, we may not be able to successfully commercialize bempedoic acid.
In some foreign countries, particularly in Canada and European countries, the pricing of
prescription pharmaceuticals is subject to strict governmental control. In these countries, pricing
negotiations with governmental authorities can take six to 12 months or longer after the receipt of
regulatory approval and product launch. To obtain favorable reimbursement for the indications sought
or pricing approval in some countries, we may be required to conduct a clinical study that compares
the cost-effectiveness of bempedoic acid with other available therapies. If reimbursement for bempedoic
acid is unavailable in any country in which we seek reimbursement, if it is limited in scope or amount,
if it is conditioned upon our completion of additional clinical studies, or if pricing is set at
unsatisfactory levels, our operating results could be materially adversely affected.
Our future product development programs for candidates other than bempedoic acid may require substantial
financial resources and may ultimately be unsuccessful.
In addition to the development of bempedoic acid, we may in the future pursue the development
of other early-stage development programs. Our potential product candidate has not commenced any
clinical studies, and there are a number of FDA requirements that we must satisfy before we can
commence such clinical studies. Satisfaction of these requirements will entail substantial time, effort
and financial resources. We may never satisfy these requirements. Any time, effort and financial
36
resources we expend on any early-stage development programs that we may pursue may adversely
affect our ability to continue development and commercialization of bempedoic acid, and we may never
commence clinical studies of such development programs despite expending significant resources in
pursuit of their development. If we do commence clinical studies of our other potential product
candidates, such product candidates may never be approved by the FDA.
Recent federal legislation will increase pressure to reduce prices of pharmaceutical products paid for by
Medicare, which could materially adversely affect our revenue, if any, and our results of operations.
In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of
2003, also called the MMA, changed the way Medicare covers and pays for pharmaceutical products.
The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new
reimbursement methodology based on average sales prices for physician-administered drugs. In
addition, this legislation provided authority for limiting the number of drugs that will be covered in any
therapeutic class. As a result of this legislation and the expansion of federal coverage of drug products,
we expect that there will be additional pressure to reduce costs. These cost reduction initiatives and
other provisions of this legislation could decrease the scope of coverage and the price that we receive
for any approved products and could seriously harm our business. While the MMA applies only to drug
benefits for Medicare beneficiaries, private payors often follow Medicare coverage policies and payment
limitations in setting their own reimbursement rates, and any reduction in reimbursement that results
from the MMA may cause a similar reduction in payments from private payors. This legislation may
pose an even greater risk to bempedoic acid than some other pharmaceutical products because a
significant portion of the target patient population for bempedoic acid would likely be over 65 years of
age and, therefore, many such patients will be covered by Medicare.
In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care
and Education Affordability Reconciliation Act, or collectively, the PPACA, became law in the United
States. The goal of the PPACA is to reduce the cost of healthcare and substantially change the way
healthcare is financed by both governmental and private insurers. While we cannot predict what impact
on federal reimbursement policies this legislation will have in general or on our business specifically,
the PPACA may result in downward pressure on pharmaceutical reimbursement, which could negatively
affect market acceptance of bempedoic acid, if approved, or any of our future products. In 2012,
members of the U.S. Congress and some state legislatures sought to overturn certain provisions of the
PPACA including those concerning the mandatory purchase of insurance. However, on June 28, 2012,
the United States Supreme Court upheld the constitutionality of these provisions. Members of the U.S.
Congress have since proposed a number of legislative initiatives, including possible repeal of the
PPACA. We cannot predict the outcome or impact of current proposals or whether new proposals will
be made or adopted, when they may be adopted or what impact they may have on us if they are
adopted. These challenges add to the uncertainty of the legislative changes as part of ACA.
Finally, the availability of generic LDL-C lowering treatments may also substantially reduce the
likelihood of reimbursement for branded counterparts or other competitive LDL-C lowering therapies,
such as bempedoic acid if it is approved for commercial distribution. If we fail to successfully secure
and maintain reimbursement coverage for our products or are significantly delayed in doing so, we will
have difficulty achieving market acceptance of our products and our business will be harmed.
Recent federal legislation and actions by state and local governments may permit reimportation of drugs from
foreign countries into the United States, including foreign countries where the drugs are sold at lower prices
than in the United States, which could materially adversely affect our operating results.
We may face competition for bempedoic acid, if approved, from cheaper LDL-C lowering
therapies sourced from foreign countries that have placed price controls on pharmaceutical products.
The MMA contains provisions that may change U.S. importation laws and expand pharmacists’ and
37
wholesalers’ ability to import cheaper versions of an approved drug and competing products from
Canada, where there are government price controls. These changes to U.S. importation laws will not
take effect unless and until the Secretary of Health and Human Services certifies that the changes will
pose no additional risk to the public’s health and safety and will result in a significant reduction in the
cost of products to consumers. The Secretary of Health and Human Services has so far declined to
approve a reimportation plan. Proponents of drug reimportation may attempt to pass legislation that
would directly allow reimportation under certain circumstances. Legislation or regulations allowing the
reimportation of drugs, if enacted, could decrease the price we receive for any products that we may
develop, including bempedoic acid, and adversely affect our future revenues and prospects for
profitability.
The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of
off-label uses. If we are found to have improperly promoted off-label uses, we may become subject to
significant liability.
The FDA and other regulatory agencies strictly regulate the promotional claims that may be made
about prescription products, such as bempedoic acid if approved. In particular, a product may not be
promoted for uses that are not approved by the FDA or other regulatory agencies as reflected in the
product’s approved labeling. If we receive marketing approval for bempedoic acid as a therapy for
lowering LDL-C levels in ‘‘statin intolerant’’ patients with elevated LDL-C, the first indication we
intend to pursue, physicians may nevertheless prescribe bempedoic acid to their patients in a manner
that is inconsistent with the approved label, potentially including as a therapy in addition to statins. If
we are found to have promoted such off-label uses, we may become subject to significant liability. The
federal government has levied large civil and criminal fines against companies for alleged improper
promotion and has enjoined several companies from engaging in off-label promotion. The FDA has
also requested that companies enter into consent decrees, corporate integrity agreements or permanent
injunctions under which specified promotional conduct is changed or curtailed. If we cannot
successfully manage the promotion of bempedoic acid, if approved, we could become subject to
significant liability, which would materially adversely affect our business and financial condition.
Our market is subject to intense competition. If we are unable to compete effectively, our opportunity to
generate revenue from the sale of bempedoic acid, if approved, will be materially adversely affected.
The LDL-C lowering therapies market is highly competitive and dynamic and dominated by the
sale of statin treatments, including the cheaper generic versions of statins. We estimate that the total
statin monotherapy and fixed combination market, including generic drugs, accounted for 69% of U.S.
sales in the LDL-C lowering market in 2012. Our success will depend, in part, on our ability to obtain
a share of the market, initially, for patients who are ‘‘statin intolerant’’. Potential competitors in North
America, Europe and elsewhere include major pharmaceutical companies, specialty pharmaceutical
companies, biotechnology firms, universities and other research institutions and government agencies.
Other pharmaceutical companies may develop LDL-C lowering therapies for ‘‘statin intolerant’’
patients that compete with bempedoic acid, if approved, that do not infringe the claims of our patents,
pending patent applications or other proprietary rights, which could materially adversely affect our
business and results of operations. The FDA has also indicated to us that approval of other therapies
that may be taken by ‘‘statin intolerant’’ patients could have an impact on their review of an NDA we
submit for bempedoic acid for our LDL-C lowering program in these patients.
LDL-C lowering therapies currently on the market that would compete with bempedoic acid
include the following:
• Branded statins and their cheaper generic versions;
38
• Cholesterol absorption inhibitors, such as Zetia(cid:4) (ezetimibe), a monotherapy marketed by
Merck & Co., and the cheaper generic version;
• PCSK9 inhibitors such as Praluent(cid:4) (alirocumab) and Repatha(cid:4) (evolocumab), marketed by
Sanofi/Regeneron and Amgen Inc. respectively;
• Bile acid sequestrants such as Welchol(cid:4) (colesevelam), marketed by Daiichi Sankyo Inc.;
• MTP inhibitors, such as JUXTAPID(cid:4) (lomitapide), marketed by Novelion Therapeutics, Inc.;
• Apo B Anti-Sense therapy, such as KYNAMRO(cid:4) (mipomersen), marketed by Kastle
Therapeutics LLC;
• Combination therapies, such as Vytorin(cid:4) (ezetimibe and simvastatin) and Liptruzet(cid:4) (ezetimibe
and atorvastatin), marketed by Merck & Co., Inc.; and
• Other lipid-lowering monotherapies (including cheaper generic versions), such as Tricor(cid:4)
(fenofibrate) and Niaspan(cid:4) (niacin extended release), both of which are marketed by
AbbVie, Inc.
Several other pharmaceutical companies have other LDL-C lowering therapies in development that
may be approved for marketing in the U.S. or outside of the U.S. Based on publicly available
information, we believe the current therapies in development that would compete with bempedoic acid
include:
• PCSK9 inhibitors in development from Lilly, Roche, Kowa and The Medicines Company/
Alnylam; and
• CETP inhibitors, such as anacetrapib and dalcetrapib, therapies, in Phase 3 clinical testing being
developed by Merck and DalCor, respectively.
Many of our potential competitors have substantially greater financial, technical and human
resources than we do and significantly greater experience discovering and developing drug candidates,
obtaining FDA and other marketing approvals of products and commercializing those products.
Accordingly, our competitors may be more successful than we may be in obtaining FDA approval for
drugs and achieving widespread market acceptance. Our competitors’ drugs may be more effective, or
more effectively marketed and sold, than bempedoic acid, if approved, and may render bempedoic acid
obsolete or non-competitive before we can recover the expenses of developing and commercializing it.
If approved, bempedoic acid may also compete with unapproved and off-label LDL-C lowering
treatments, and following the expiration of additional patents covering the LDL-C lowering market, we
may also face additional competition from the entry of new generic drugs. We anticipate that we will
encounter intense and increasing competition as new drugs enter the market and advanced technologies
become available.
We face potential product liability exposure, and, if claims are brought against us, we may incur substantial
liability.
The use of bempedoic acid in clinical studies and the sale of bempedoic acid, if approved, exposes
us to the risk of product liability claims. Product liability claims might be brought against us by patients,
healthcare providers or others selling or otherwise coming into contact with bempedoic acid. For
example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise
unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims
may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers
inherent in the product, including as a result of interactions with alcohol or other drugs, negligence,
strict liability, and a breach of warranties. Claims could also be asserted under state consumer
protection acts. If we become subject to product liability claims and cannot successfully defend
39
ourselves against them, we could incur substantial liabilities. In addition, regardless of merit or eventual
outcome, product liability claims may result in, among other things:
• withdrawal of patients from our clinical studies;
• substantial monetary awards to patients or other claimants;
• decreased demand for bempedoic acid or any future product candidates following marketing
approval, if obtained;
• damage to our reputation and exposure to adverse publicity;
• increased FDA warnings on product labels;
• litigation costs;
• distraction of management’s attention from our primary business;
• loss of revenue; and
• the inability to successfully commercialize bempedoic acid or any future product candidates, if
approved.
We maintain product liability insurance coverage for our clinical studies with a $10.0 million
annual aggregate coverage limit. Nevertheless, our insurance coverage may be insufficient to reimburse
us for any expenses or losses we may suffer. Moreover, in the future, we may not be able to maintain
insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses, including
if insurance coverage becomes increasingly expensive. If and when we obtain marketing approval for
bempedoic acid, we intend to expand our insurance coverage to include the sale of commercial
products; however, we may not be able to obtain this product liability insurance on commercially
reasonable terms. Large judgments have been awarded in class action lawsuits based on drugs that had
unanticipated side effects. The cost of any product liability litigation or other proceedings, even if
resolved in our favor, could be substantial, particularly in light of the size of our business and financial
resources. A product liability claim or series of claims brought against us could cause our stock price to
decline and, if we are unsuccessful in defending such a claim or claims and the resulting judgments
exceed our insurance coverage, our financial condition, business and prospects could be materially
adversely affected.
We are subject to healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties,
contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and others will play a primary role in the recommendation and
prescription of bempedoic acid, if approved. Our future arrangements with third-party payors will
expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may
constrain the business or financial arrangements and relationships through which we market, sell and
distribute bempedoic acid, if we obtain marketing approval. Restrictions under applicable federal and
state healthcare laws and regulations include the following:
• The federal healthcare anti-kickback statute prohibits, among other things, persons from
knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or
indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the
purchase, order or recommendation of, any good or service, for which payment may be made
under federal healthcare programs such as Medicare and Medicaid.
• The federal False Claims Act imposes criminal and civil penalties, including those from civil
whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or
causing to be presented, to the federal government, claims for payment that are false or
40
fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money
to the federal government.
• The federal Health Insurance Portability and Accountability Act of 1996, as amended by the
Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil
liability for executing a scheme to defraud any healthcare benefit program and also imposes
obligations, including mandatory contractual terms, with respect to safeguarding the privacy,
security and transmission of individually identifiable health information.
• The federal false statements statute prohibits knowingly and willfully falsifying, concealing or
covering up a material fact or making any materially false statement in connection with the
delivery of or payment for healthcare benefits, items or services.
• The federal transparency requirements under the PPACA require manufacturers of drugs,
devices, biologics, and medical supplies to report to the Department of Health and Human
Services information related to physician payments and other transfers of value and physician
ownership and investment interests.
• Analogous state laws and regulations, such as state anti-kickback and false claims laws and
transparency laws, may apply to sales or marketing arrangements and claims involving healthcare
items or services reimbursed by non-governmental third-party payors, including private insurers,
and some state laws require pharmaceutical companies to comply with the pharmaceutical
industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by
the federal government in addition to requiring drug manufacturers to report information
related to payments to physicians and other healthcare providers or marketing expenditures and
drug pricing.
Ensuring that our future business arrangements with third parties comply with applicable
healthcare laws and regulations could be costly. It is possible that governmental authorities will
conclude that our business practices do not comply with current or future statutes, regulations or case
law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations,
including anticipated activities to be conducted by our sales team, were found to be in violation of any
of these laws or any other governmental regulations that may apply to us, we may be subject to
significant civil, criminal and administrative penalties, damages, fines and exclusion from government
funded healthcare programs, such as Medicare and Medicaid, any of which could substantially disrupt
our operations. If any of the physicians or other providers or entities with whom we expect to do
business is found not to be in compliance with applicable laws, they may be subject to criminal, civil or
administrative sanctions, including exclusions from government funded healthcare programs.
Our internal computer systems, or those of our third-party clinical research organizations or other contractors
or consultants, may fail or suffer security breaches, which could result in a material disruption of our
bempedoic acid development programs.
Despite the implementation of security measures, our internal computer systems and those of our
third-party clinical research organizations and other contractors and consultants are vulnerable to
damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and
telecommunication and electrical failures. While we have not experienced any such system failure,
accident, or security breach to date, if such an event were to occur and cause interruptions in our
operations, it could result in a material disruption of our programs. For example, the loss of clinical
study data for bempedoic acid could result in delays in our regulatory approval efforts and significantly
increase our costs to recover or reproduce the data. To the extent that any disruption or security breach
results in a loss of or damage to our data or applications or other data or applications relating to our
technology or product candidates, or inappropriate disclosure of confidential or proprietary
information, we could incur liabilities and the further development of bempedoic acid could be delayed.
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Our credit facility imposes significant restrictions on our business, and if we default on our obligations, our
lender would have a right to foreclose on substantially all our assets.
In June 2014, we entered into a loan and security agreement, or loan agreement, with Oxford
Finance LLC, or Oxford, pursuant to which, subject to the conditions to borrowing thereunder, we
borrowed an aggregate principal amount of $5.0 million. The loans are secured by a lien on
substantially all of our assets excluding intellectual property.
We could in the future incur additional indebtedness beyond amounts currently outstanding under
our loan agreement with Oxford. Our debt combined with our other financial obligations and
contractual commitments could have significant adverse consequences, including:
• requiring us to dedicate a substantial portion of cash flow from operations to the payment of
interest on, and principal of, our debt, which will reduce the amounts available to fund working
capital, capital expenditures, product development efforts and other general corporate purposes;
• increasing our vulnerability to adverse changes in general economic, industry and market
conditions;
• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in
which we compete; and
• placing us at a competitive disadvantage compared to our competitors that have less debt or
better debt servicing options.
Additionally, with certain exceptions, the loan agreement prohibits us from:
• making any material dispositions of our assets, except for permitted dispositions;
• making any changes in our business, management, ownership, or business locations;
• entering into any merger or consolidation without Oxford’s consent;
• acquiring or making investments in any other person other than permitted investments;
• incurring any indebtedness, other than permitted indebtedness;
• granting or permitting liens against our assets, other than permitted liens;
• declaring or paying any dividends or making any other distributions; or
• entering into any material transaction with any affiliate, other than in the ordinary course of
business.
We intend to satisfy our current and future debt service obligations with our cash and cash
equivalents and short-term investments and funds from external sources. However, we may not have
sufficient funds or may be unable to arrange for additional financing to pay the amounts due under our
existing debt. Funds from external sources may not be available on acceptable terms, if at all. In
addition, a failure to comply with the covenants under our debt instruments could result in an event of
default under those instruments. In the event of an acceleration of amounts due under our debt
instruments as a result of an event of default, we may not have sufficient funds and may be unable to
arrange for additional financing to repay our indebtedness, and our lender could seek to enforce
security interests in the collateral securing such indebtedness. In addition, the covenants under our debt
instruments and the pledge of our assets as collateral limit our ability to obtain additional debt
financing.
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Risks Related to our Intellectual Property
If we are unable to adequately protect our proprietary technology or maintain issued patents which are
sufficient to protect bempedoic acid, others could compete against us more directly, which would have a
material adverse impact on our business, results of operations, financial condition and prospects.
Our commercial success will depend in part on our success obtaining and maintaining issued
patents and other intellectual property rights in the United States and elsewhere and protecting our
proprietary technology. If we do not adequately protect our intellectual property and proprietary
technology, competitors may be able to use our technologies and erode or negate any competitive
advantage we may have, which could harm our business and ability to achieve profitability.
As of December 31, 2016, our patent estate, including patents we own or license from third
parties, on a worldwide basis, included approximately 25 issued United States patents and four pending
United States patent applications and 23 issued patents and 15 pending patent applications in other
foreign jurisdictions. Of our worldwide patents and pending applications, only a subset relates to our
small molecule program which includes our lead product candidate, bempedoic acid. Bempedoic acid is
claimed in U.S. Patent No. 7,335,799 that is scheduled to expire in December 2025, which includes
711 days of patent term adjustment, and may be eligible for a patent term extension period of up to
five years. U.S. Patent Nos. 9,000,041 and 8,497,301 claim methods of treatment using bempedoic acid.
We also have a pending U.S. patent application directed to bempedoic acid. There are currently three
issued patents and four pending application in countries outside the United States that relate to
bempedoic acid.
A subset of this portfolio relates to our planned fixed dose combination of bempedoic acid and
ezetimibe and bempedoic acid and one or more statins. We have one pending application outside the
United States claiming methods of treatment using a fixed dose combination of bempedoic acid and
ezetimibe. We have one pending application outside the United States claiming methods of treatment
using a fixed dose combination of bempedoic acid and one or more statins.
We may not have identified all patents, published applications or published literature that affect
our business either by blocking our ability to commercialize our drug candidates, by preventing the
patentability of one or more aspects of our drug candidates to us or our licensors or co-owners, or by
covering the same or similar technologies that may affect our ability to market our drug candidates. For
example, we (or the licensor of a drug candidate to us) may not have conducted a patent clearance
search to identify potentially obstructing third party patents. Moreover, patent applications in the
United States are maintained in confidence for up to 18 months after their filing. In some cases,
however, patent applications remain confidential in the U.S. Patent and Trademark Office, or the
U.S. PTO, for the entire time prior to issuance as a U.S. patent. Patent applications filed in countries
outside of the United States are not typically published until at least 18 months from their first filing
date. Similarly, publication of discoveries in the scientific or patent literature often lags behind actual
discoveries. We cannot be certain that we or our licensors or co-owners were the first to invent, or the
first to file, patent applications covering our drug candidates. We also may not know if our competitors
filed patent applications for technology covered by our pending applications or if we were the first to
invent the technology that is the subject of our patent applications. Competitors may have filed patent
applications or received patents and may obtain additional patents and proprietary rights that block or
compete with our patents.
Others may have filed patent applications or received patents that conflict with patents or patent
applications that we own, have filed or have licensed, either by claiming the same methods, compounds
or uses or by claiming methods, compounds or uses that could dominate those owned by or licensed to
us. In addition, we may not be aware of all patents or patent applications that may affect our ability to
make, use or sell any of our drug candidates. Any conflicts resulting from third-party patent
applications and patents could affect our ability to obtain the necessary patent protection for our
43
products or processes. If other companies or entities obtain patents with conflicting claims, we may be
required to obtain licenses to these patents or to develop or obtain alternative technology. We may not
be able to obtain any such licenses on acceptable terms or at all. Any failure to obtain such licenses
could delay or prevent us from using discovery-related technology to pursue the development or
commercialization of our drug candidates, which would adversely affect our business.
We cannot assure you that any of our patents have, or that any of our pending patent applications
will mature into issued patents that will include, claims with a scope sufficient to protect bempedoic
acid or any other product candidates. Others have developed technologies that may be related or
competitive to our approach, and may have filed or may file patent applications and may have received
or may receive patents that may overlap or conflict with our patent applications, either by claiming the
same methods or formulations or by claiming subject matter that could dominate our patent position.
The patent positions of biotechnology and pharmaceutical companies, including our patent position,
involve complex legal and factual questions, and, therefore, the issuance, scope, validity and
enforceability of any patent claims that we may obtain cannot be predicted with certainty. Patents, if
issued, may be challenged, deemed unenforceable, invalidated, or circumvented. U.S. patents and
patent applications may also be subject to interference proceedings, ex parte reexamination, inter partes
review and post-grant review proceedings, supplemental examination and may be challenged in district
court. Patents granted in certain other countries may be subjected to opposition or comparable
proceedings lodged in various national and regional patent offices. These proceedings could result in
either loss of the patent or denial of the patent application or loss or reduction in the scope of one or
more of the claims of the patent or patent application. In addition, such interference, re-examination,
opposition, post-grant review, inter partes review, supplemental examination or revocation proceedings
may be costly. Thus, any patents that we may own or exclusively license may not provide any protection
against competitors. Furthermore, an adverse decision in an interference proceeding can result in a
third-party receiving the patent right sought by us, which in turn could affect our ability to develop,
market or otherwise commercialize bempedoic acid.
Furthermore, the issuance of a patent, while presumed valid and enforceable, is not conclusive as
to its validity or its enforceability and it may not provide us with adequate proprietary protection or
competitive advantages against competitors with similar products. Competitors may also be able to
design around our patents. Other parties may develop and obtain patent protection for more effective
technologies, designs or methods. We may not be able to prevent the unauthorized disclosure or use of
our technical knowledge or trade secrets by consultants, vendors, former employees and current
employees. The laws of some foreign countries do not protect our proprietary rights to the same extent
as the laws of the United States, and we may encounter significant problems in protecting our
proprietary rights in these countries. If these developments were to occur, they could have a material
adverse effect on our sales.
Our ability to enforce our patent rights depends on our ability to detect infringement. It is difficult
to detect infringers who do not advertise the components that are used in their products. Moreover, it
may be difficult or impossible to obtain evidence of infringement in a competitor’s or potential
competitor’s product. Any litigation to enforce or defend our patent rights, if any, even if we were to
prevail, could be costly and time-consuming and would divert the attention of our management and key
personnel from our business operations. We may not prevail in any lawsuits that we initiate and the
damages or other remedies awarded if we were to prevail may not be commercially meaningful.
In addition, proceedings to enforce or defend our patents could put our patents at risk of being
invalidated, held unenforceable, or interpreted narrowly. Such proceedings could also provoke third
parties to assert claims against us, including that some or all of the claims in one or more of our
patents are invalid or otherwise unenforceable. If, in any proceeding, a court invalidated or found
unenforceable our patents covering bempedoic acid, our financial position and results of operations
would be materially and adversely impacted. In addition, if a court found that valid, enforceable patents
44
held by third parties covered bempedoic acid, our financial position and results of operations would
also be materially and adversely impacted.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:
• any of our patents, or any of our pending patent applications, if issued, will include claims
having a scope sufficient to protect bempedoic acid;
• any of our pending patent applications will result in issued patents;
• we will be able to successfully commercialize bempedoic acid, if approved, before our relevant
patents expire;
• we were the first to make the inventions covered by each of our patents and pending patent
applications;
• we were the first to file patent applications for these inventions;
• others will not develop similar or alternative technologies that do not infringe our patents;
• any of our patents will be valid and enforceable;
• any patents issued to us will provide a basis for an exclusive market for our commercially viable
products, will provide us with any competitive advantages or will not be challenged by third
parties;
• we will develop additional proprietary technologies or product candidates that are separately
patentable; or
• that our commercial activities or products, or those of our licensors, will not infringe upon the
patents of others.
We rely upon unpatented trade secrets, unpatented know-how and continuing technological
innovation to develop and maintain our competitive position, which we seek to protect, in part, by
confidentiality agreements with our employees and our collaborators and consultants. We also have
agreements with our employees and selected consultants that obligate them to assign their inventions to
us. It is possible that technology relevant to our business will be independently developed by a person
that is not a party to such an agreement. Furthermore, if the employees and consultants who are
parties to these agreements breach or violate the terms of these agreements, we may not have adequate
remedies for any such breach or violation, and we could lose our trade secrets through such breaches
or violations. Further, our trade secrets could otherwise become known or be independently discovered
by our competitors.
If we are not able to adequately prevent disclosure of trade secrets and other proprietary information, the
value of our technology and products could be significantly diminished.
We rely on trade secrets to protect our proprietary technologies, especially where we do not
believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect.
We rely in part on confidentiality agreements with our employees, consultants, outside scientific
collaborators, sponsored researchers, contract manufacturers, vendors and other advisors to protect our
trade secrets and other proprietary information. These agreements may not effectively prevent
disclosure of confidential information and may not provide an adequate remedy in the event of
unauthorized disclosure of confidential information. In addition, we cannot guarantee that we have
executed these agreements with each party that may have or have had access to our trade secrets.
Moreover, because we acquired certain rights to our lead product candidate from Pfizer, we must
rely on Pfizer’s practices, and those of its predecessors, with regard to parties that may have had access
to our trade secrets related thereto before our incorporation. Any party with whom we or they have
45
executed such an agreement may breach that agreement and disclose our proprietary information,
including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.
Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive
and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the
United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to
be lawfully obtained or independently developed by a competitor, we would have no right to prevent
them, or those to whom they disclose such trade secrets, from using that technology or information to
compete with us. If any of our trade secrets were to be disclosed to or independently developed by a
competitor or other third-party, our competitive position would be harmed.
We may infringe the intellectual property rights of others, which may prevent or delay our product development
efforts and stop us from commercializing or increase the costs of commercializing bempedoic acid, if
approved.
Our success will depend in part on our ability to operate without infringing the intellectual
property and proprietary rights of third parties. We cannot assure you that our business, products and
methods do not or will not infringe the patents or other intellectual property rights of third parties.
The pharmaceutical industry is characterized by extensive litigation regarding patents and other
intellectual property rights. Other parties may allege that bempedoic acid or the use of our
technologies infringes patent claims or other intellectual property rights held by them or that we are
employing their proprietary technology without authorization. Patent and other types of intellectual
property litigation can involve complex factual and legal questions, and their outcome is uncertain. Any
claim relating to intellectual property infringement that is successfully asserted against us may require
us to pay substantial damages, including treble damages and attorney’s fees if we are found to be
willfully infringing another party’s patents, for past use of the asserted intellectual property and
royalties and other consideration going forward if we are forced to take a license. In addition, if any
such claim were successfully asserted against us and we could not obtain such a license, we may be
forced to stop or delay developing, manufacturing, selling or otherwise commercializing bempedoic
acid.
Even if we are successful in these proceedings, we may incur substantial costs and divert
management time and attention in pursuing these proceedings, which could have a material adverse
effect on us. If we are unable to avoid infringing the patent rights of others, we may be required to
seek a license, defend an infringement action or challenge the validity of the patents in court, or
redesign our products. Patent litigation is costly and time consuming. We may not have sufficient
resources to bring these actions to a successful conclusion. In addition, intellectual property litigation or
claims could force us to do one or more of the following:
• cease developing, selling or otherwise commercializing bempedoic acid;
• pay substantial damages for past use of the asserted intellectual property;
• obtain a license from the holder of the asserted intellectual property, which license may not be
available on reasonable terms, if at all; and
• redesign, or rename in the case of trademark claims, bempedoic acid to avoid infringing the
intellectual property rights of third parties, which may not be possible and, even if possible,
could be costly and time-consuming.
Any of these risks coming to fruition could have a material adverse effect on our business, results
of operations, financial condition and prospects.
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Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to
protect our products.
The United States has enacted and is currently implementing the America Invents Act of 2011,
wide-ranging patent reform legislation. The United States Supreme Court has ruled on several patent
cases in recent years, either narrowing the scope of patent protection available in certain circumstances
or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with
regard to our ability to obtain patents in the future, this combination of events has created uncertainty
with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the
federal courts, and the U.S. PTO, the laws and regulations governing patents could change in
unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing
patents and patents that we might obtain in the future.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document
submission, fee payment and other requirements imposed by governmental patent agencies, and our patent
protection could be reduced or eliminated for non-compliance with these requirements.
The U.S. PTO and various foreign governmental patent agencies require compliance with a
number of procedural, documentary, fee payment and other provisions during the patent process. There
are situations in which noncompliance can result in abandonment or lapse of a patent or patent
application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an
event, competitors might be able to enter the market earlier than would otherwise have been the case.
We could become dependent on licensed intellectual property. If we were to lose our rights to licensed
intellectual property, we may not be able to continue developing or commercializing bempedoic acid or other
product candidates, if approved.
In the future, we may enter into license(s) to third-party intellectual property that are necessary or
useful to our business. Such license agreement(s) will likely impose various obligations upon us, and
our licensor(s) have or may have the right to terminate the license thereunder in the event of a
material breach or, in some cases, at will. Future licensor(s) may allege that we have breached our
license agreement with them or decide to terminate our license at will, and accordingly seek to
terminate our license. If successful, this could result in our loss of the right to use the licensed
intellectual property, which could materially adversely affect our ability to develop and commercialize a
product candidate or product, if approved, as well as harm our competitive business position and our
business prospects.
We do not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may
not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek
protection.
Filing, prosecuting and defending patents on product candidates in all countries and jurisdictions
throughout the world would be prohibitively expensive, and our intellectual property rights in some
countries outside the United States could be less extensive than those in the United States. In addition,
the laws of some foreign countries do not protect intellectual property rights to the same extent as
federal and state laws in the United States. Consequently, we may not be able to prevent third parties
from practicing our inventions in all countries outside the United States, or from selling or importing
products made using our inventions in and into the United States or other jurisdictions. Competitors
may use our technologies in jurisdictions where we have not obtained patent protection to develop
their own products and further, may export otherwise infringing products to territories where we have
patent protection, but enforcement is not as strong as that in the United States. These products may
compete with our products and our patents or other intellectual property rights may not be effective or
sufficient to prevent them from competing.
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Many companies have encountered significant problems in protecting and defending intellectual
property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain
developing countries, do not favor the enforcement of patents and other intellectual property
protection, particularly those relating to emerging pharmaceuticals, which could make it difficult for us
to stop the infringement of our patents or marketing of competing products in violation of our
proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could
result in substantial costs and divert our efforts and attention from other aspects of our business, could
put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications
at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in
any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be
commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the
world may be inadequate to obtain a significant commercial advantage from the intellectual property
that we develop or license.
We may be subject to damages resulting from claims that we or our employees have wrongfully used or
disclosed alleged trade secrets of their former employers.
Our employees have been previously employed at other biotechnology or pharmaceutical
companies, including our competitors or potential competitors. Although we are not aware of any
claims currently pending against us, we may be subject to claims that these employees or we have
inadvertently or otherwise used or disclosed trade secrets or other proprietary information of the
former employers of our employees. Litigation may be necessary to defend against these claims. Even if
we are successful in defending against these claims, litigation could result in substantial costs and be a
distraction to management. If we fail in defending such claims, in addition to paying money claims, we
may lose valuable intellectual property rights or personnel. A loss of key personnel or their work
product could hamper or prevent our ability to commercialize bempedoic acid, which would materially
adversely affect our commercial development efforts.
Risks Related to our Dependence on Third Parties
We will be unable to directly control all aspects of our clinical studies due to our reliance on CROs and other
third parties that assist us in conducting clinical studies.
We relied on CROs in our prior clinical studies, and will continue to rely on CROs to conduct our
ongoing Phase 3 clinical studies and CVOT for bempedoic acid, as well as any clinical studies we may
undertake to develop BA + EZ. As a result, we will have less direct control over the conduct, timing
and completion of these clinical studies and the management of data developed through the clinical
studies than would be the case if we were relying entirely upon our own staff. Communicating with
outside parties can also be challenging, potentially leading to mistakes as well as difficulties in
coordinating activities. Outside parties may:
• have staffing difficulties;
• fail to comply with contractual obligations;
• experience regulatory compliance issues;
• undergo changes in priorities or become financially distressed; or
• form relationships with other entities, some of which may be our competitors.
These factors may materially adversely affect the willingness or ability of third parties to conduct
our clinical studies and may subject us to unexpected cost increases that are beyond our control.
Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical
Practices, for conducting, recording, and reporting the results of clinical studies to assure that data and
48
reported results are credible and accurate and that the rights, integrity and confidentiality of clinical
study participants are protected. Our reliance on third parties that we do not control does not relieve
us of these responsibilities and requirements.
Problems with the timeliness or quality of the work of any CRO may lead us to seek to terminate
our relationship with any such CRO and use an alternative service provider. Making this change may
be costly and may delay our clinical studies, and contractual restrictions may make such a change
difficult or impossible to effect. If we must replace any CRO that is conducting our clinical studies, our
clinical studies may have to be suspended until we find another CRO that offers comparable services.
The time that it takes us to find alternative organizations may cause a delay in the commercialization
of bempedoic acid or may cause us to incur significant expenses to replicate data that may be lost.
Although we do not believe that any CRO on which we may rely will offer services that are not
available elsewhere, it may be difficult to find a replacement organization that can conduct our clinical
studies in an acceptable manner and at an acceptable cost. Any delay in or inability to complete our
clinical studies could significantly compromise our ability to secure regulatory approval of bempedoic
acid and preclude our ability to commercialize bempedoic acid, thereby limiting or preventing our
ability to generate revenue from its sales.
We rely completely on third-party suppliers to manufacture our clinical drug supplies for bempedoic acid, and
we intend to rely on third parties to produce commercial supplies of bempedoic acid and preclinical, clinical
and commercial supplies of any future product candidate.
We do not currently have, nor do we plan to acquire, the infrastructure or capability to internally
manufacture our clinical drug supply of bempedoic acid, or any future product candidates, for use in
the conduct of our preclinical studies and clinical studies, and we lack the internal resources and the
capability to manufacture any product candidates on a clinical or commercial scale. In addition, we
have no control over the production of ezetimibe for our BA + EZ product candidate. The facilities
used by our contract manufacturers to manufacture the active pharmaceutical ingredient and final drug
for bempedoic acid, or any future product candidates, must be approved by the FDA and other
comparable foreign regulatory agencies pursuant to inspections that would be conducted after we
submit our NDA or relevant foreign regulatory submission to the applicable regulatory agency.
We do not control the manufacturing process of, and are completely dependent on, our contract
manufacturers to comply with current Good Manufacturing Practices for manufacture of both active
drug substances and finished drug products. If our contract manufacturers cannot successfully
manufacture material that conforms to our specifications and the strict regulatory requirements of the
FDA or applicable foreign regulatory agencies, they will not be able to secure and/or maintain
regulatory approval for their manufacturing facilities. In addition, we have no direct control over our
contract manufacturers’ ability to maintain adequate quality control, quality assurance and qualified
personnel. Furthermore, all of our contract manufacturers are engaged with other companies to supply
and/or manufacture materials or products for such companies, which exposes our manufacturers to
regulatory risks for the production of such materials and products. As a result, failure to satisfy the
regulatory requirements for the production of those materials and products may affect the regulatory
clearance of our contract manufacturers’ facilities generally. If the FDA or a comparable foreign
regulatory agency does not approve these facilities for the manufacture of our product candidates or if
it withdraws its approval in the future, we may need to find alternative manufacturing facilities, which
would adversely impact our ability to develop, obtain regulatory approval for or market our product
candidates.
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If we do not establish successful collaborations, we may have to alter our development and commercialization
plans for bempedoic acid.
Our drug development programs and commercialization plans for bempedoic acid will require
substantial additional cash to fund expenses. We may develop and initially commercialize bempedoic
acid in the United States without a partner. However, in order to pursue the broader statin resistant
market in the United States, we may also enter into a partnership or co-promotion arrangement with
an established pharmaceutical company that has a larger sales force and we may enter into
collaborative arrangements to develop and commercialize bempedoic acid outside of the United States.
We will face significant competition in seeking appropriate collaborators and these collaboration
agreements are complex and time-consuming to negotiate. We may not be able to negotiate
collaborations on acceptable terms, or at all. If that were to occur, we may have to curtail the
development or delay commercialization of bempedoic acid in certain geographies, reduce the scope of
our sales or marketing activities, reduce the scope of our commercialization plans, or increase our
expenditures and undertake development or commercialization activities at our own expense. If we
elect to increase our expenditures to fund development or commercialization activities outside of the
United States on our own, we may need to obtain additional capital, which may not be available to us
on acceptable terms, or at all.
If a collaborative partner terminates or fails to perform its obligations under an agreement with us, the
commercialization of bempedoic acid could be delayed or terminated.
We are not currently party to any collaborative arrangements for the commercialization of
bempedoic acid or similar arrangements, although we may pursue such arrangements before any
commercialization of bempedoic acid outside of the United States or to further commercialize
bempedoic acid in the broader statin resistant market in the United States, if approved. If we are
successful in entering into collaborative arrangements for the commercialization of bempedoic acid or
similar arrangements and any of our collaborative partners does not devote sufficient time and
resources to a collaboration arrangement with us, we may not realize the potential commercial benefits
of the arrangement, and our results of operations may be materially adversely affected. In addition, if
any such future collaboration partner were to breach or terminate its arrangements with us, the
commercialization of bempedoic acid could be delayed, curtailed or terminated because we may not
have sufficient financial resources or capabilities to continue commercialization of bempedoic acid on
our own in such locations.
Much of the potential revenue from future collaborations may consist of contingent payments, such
as payments for achieving regulatory milestones or royalties payable on sales of drugs. The milestone
and royalty revenue that we may receive under these collaborations will depend upon our collaborators’
ability to successfully develop, introduce, market and sell new products. In addition, collaborators may
decide to enter into arrangements with third parties to commercialize products developed under
collaborations using our technologies, which could reduce the milestone and royalty revenue that we
may receive, if any. Future collaboration partners may fail to develop or effectively commercialize
products using our products or technologies because they:
• decide not to devote the necessary resources due to internal constraints, such as limited
personnel with the requisite expertise, limited cash resources or specialized equipment
limitations, or the belief that other drug development programs may have a higher likelihood of
obtaining marketing approval or may potentially generate a greater return on investment;
• decide to pursue other technologies or develop other product candidates, either on their own or
in collaboration with others, including our competitors, to treat the same diseases targeted by
our own collaborative programs;
50
• do not have sufficient resources necessary to carry the product candidate through clinical
development, marketing approval and commercialization; or
• cannot obtain the necessary marketing approvals.
Competition may negatively impact a partner’s focus on and commitment to bempedoic acid and,
as a result, could delay or otherwise negatively affect the commercialization of bempedoic acid outside
of the United States or in the broader statin resistant market in the United States. If future
collaboration partners fail to develop or effectively commercialize bempedoic acid for any of these
reasons, our sales of bempedoic acid, if approved, may be limited, which would have a material adverse
effect on our operating results and financial condition.
Risks Related to General Business, Employee Matters and Managing Growth
We will need to develop and expand our company, and we may encounter difficulties in managing this
development and expansion, which could disrupt our operations.
We expect that we will continue to increase our workforce and the scope of our operations. To
manage our anticipated development and expansion, we must continue to implement and improve our
managerial, operational and financial systems, expand our facilities and continue to recruit and train
additional qualified personnel. Also, our management may need to divert a disproportionate amount of
its attention away from its day-to-day activities and devote a substantial amount of time to managing
these development activities. Due to our limited resources, we may not be able to effectively manage
the expansion of our operations or recruit and train additional qualified personnel. This may result in
weaknesses in our infrastructure; or give rise to operational mistakes, loss of business opportunities,
loss of employees and reduced productivity among remaining employees. The physical expansion of our
operations may lead to significant costs and may divert financial resources from other projects, such as
the development of bempedoic acid. If our management is unable to effectively manage our expected
development and expansion, our expenses may increase more than anticipated, our ability to generate
or increase our revenue could be reduced and we may not be able to implement our business strategy.
Our future financial performance and our ability to commercialize bempedoic acid, if approved, and
compete effectively will depend, in part, on our ability to effectively manage the future development
and expansion of our company.
Our future success depends on our ability to retain members of our senior management team, and to attract,
retain and motivate qualified personnel.
We are highly dependent on members of our senior management team. We have entered into
employment agreements with these individuals, but any employee may terminate his or her employment
with us. Although we do not have any reason to believe that we will lose the services of these
individuals in the foreseeable future, the loss of the services of these individuals might impede the
achievement of our research, development and commercialization objectives. We rely on consultants
and advisors, including scientific and clinical advisors, to assist us in formulating our development and
commercialization strategy. Our consultants and advisors may be employed by employers other than us
and may have commitments under consulting or advisory contracts with other entities that may limit
their availability to us. Recruiting and retaining qualified scientific personnel and sales and marketing
personnel will also be critical to our success. We may not be able to attract and retain these personnel
on acceptable terms given the competition among numerous pharmaceutical and biotechnology
companies for similar personnel. We also experience competition for the hiring of scientific personnel
from universities and research institutions. Failure to succeed in clinical studies may make it more
challenging to recruit and retain qualified scientific personnel.
51
Our company lacks experience commercializing products, which may have a material adverse effect on our
business.
We will need to transition from a company with a development focus to a company capable of
supporting commercial activities. We may be unsuccessful in making such a transition. Our company
has never filed an NDA and has not yet demonstrated an ability to obtain marketing approval for or
commercialize a product candidate. Therefore, our clinical development and regulatory approval
process may involve more inherent risk, take longer, and cost more than it would if we were a company
with a more significant operating history and had experience obtaining marketing approval for and
commercializing a product candidate.
Our employees may engage in misconduct or other improper activities, including violating applicable
regulatory standards and requirements or engaging in insider trading, which could significantly harm our
business.
We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees
could include intentional failures to comply with the regulations of the FDA and applicable non-U.S.
regulators, provide accurate information to the FDA and applicable non-U.S. regulators, comply with
healthcare fraud and abuse laws and regulations in the United States and abroad, report financial
information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing
and business arrangements in the healthcare industry are subject to extensive laws and regulations
intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws
and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales
commission, customer incentive programs and other business arrangements. Employee misconduct
could also involve the improper use of, including trading on, information obtained in the course of
clinical studies, which could result in regulatory sanctions and serious harm to our reputation. We have
adopted a code of conduct, but it is not always possible to identify and deter employee misconduct, and
the precautions we take to detect and prevent this activity may be ineffective in controlling unknown or
unmanaged risks or losses or in protecting us from governmental investigations or other actions or
lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are
instituted against us, and we are not successful in defending ourselves or asserting our rights, those
actions could have a significant impact on our business, including the imposition of significant fines or
other sanctions.
In order to satisfy our obligations as a publicly traded company, we may need to hire qualified accounting
and financial personnel with appropriate public company experience.
As a relatively new public company, we need to establish and maintain effective disclosure and
financial controls and our corporate governance practices that we adopted in connection with our initial
public offering. We may need to hire additional accounting and financial personnel with appropriate
public company experience and technical accounting knowledge, and it may be difficult to recruit and
maintain such personnel. Even if we are able to hire appropriate personnel, our existing operating
expenses and operations will be impacted by the direct costs of their employment and the indirect
consequences related to the diversion of management resources from product development efforts.
Risks Related to our Financial Position and Capital Requirements
We have not generated any revenue from bempedoic acid and may never be profitable.
Our ability to become profitable depends upon our ability to generate revenue. To date, we have
not generated any revenue from our lead product candidate, bempedoic acid, and we do not know
when, or if, we will generate any revenue. We do not expect to generate significant revenue unless and
52
until we obtain marketing approval of, and begin to sell, bempedoic acid. Our ability to generate
revenue depends on a number of factors, including, but not limited to, our ability to:
• successfully complete our CLEAR Outcomes CVOT;
• successfully complete our global pivotal Phase 3 LDL-C lowering program;
• initiate and successfully complete all safety studies required to obtain U.S. and foreign marketing
approval for bempedoic acid as a treatment for ‘‘statin intolerant’’ patients for LDL-C lowering
or CV risk reduction;
• commercialize bempedoic acid, if approved, by developing a sales force or entering into
collaborations with third parties; and
• achieve market acceptance of bempedoic acid in the medical community and with third-party
payors.
Absent our entering into a collaboration or partnership agreement, we expect to incur significant
sales and marketing costs as we prepare to commercialize bempedoic acid. Even if we initiate and
successfully complete our clinical program of bempedoic acid and achieve all clinical endpoints and
bempedoic acid is approved for commercial sale, and despite expending these costs, bempedoic acid
may not be a commercially successful drug. We may not achieve profitability soon after generating
product sales, if ever. If we are unable to generate product revenue, we will not become profitable and
may be unable to continue operations without continued funding.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require
us to relinquish rights.
We may seek additional capital through a combination of private and public equity offerings, debt
financings, royalty-based financings, collaborations and strategic and licensing arrangements. To the
extent that we raise additional capital through the sale of common stock or securities convertible or
exchangeable into common stock, your ownership interest in our company will be diluted. In addition,
the terms of any such securities may include liquidation or other preferences that materially adversely
affect your rights as a stockholder. Debt financing, if available, would increase our fixed payment
obligations. Debt or royalty-based financings 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 collaboration, strategic
partnerships and licensing arrangements with third parties, we may have to relinquish valuable rights to
bempedoic acid, our intellectual property, future revenue streams or grant licenses on terms that are
not favorable to us.
Our ability to use our net operating loss carryforwards may be subject to limitation.
At December 31, 2016, we had United States federal net operating loss carryforwards of
approximately $196.4 million and state net operating loss carryforwards of approximately $18.1 million.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a
corporation undergoes an ‘‘ownership change,’’ the corporation’s ability to use its pre-change net
operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset
its post-change income may be limited. In general, an ‘‘ownership change’’ will occur if there is a
cumulative change in our ownership by ‘‘5-percent shareholders’’ that exceeds 50 percentage points
over a rolling three-year period. Similar rules may apply under state tax laws. As a result of prior
equity issuances and other transactions in our stock, we have previously experienced ‘‘ownership
changes’’ under section 382 of the Code and comparable state tax laws. We may also experience
ownership changes in the future as a result of future transactions in our stock. As a result, if we earn
net taxable income, our ability to use our pre-change net operating loss carryforwards or other
53
pre-change tax attributes to offset United States federal and state taxable income is subject to
limitations.
Complying with public company reporting and other obligations may strain our financial and managerial
resources. Additionally, we are obligated to develop and maintain proper and effective internal control over
financial reporting, but we may not complete our analysis of our internal control over financial reporting in a
timely manner or these internal controls may not be determined to be effective, either of which may harm
investor confidence in us and the value of our common stock.
As a public company, we are required to comply with applicable provisions of the Sarbanes-Oxley
Act of 2002, as well as other rules and regulations promulgated by the SEC and the NASDAQ Stock
Market LLC, or NASDAQ, which results in significant initial and continuing legal, accounting,
administrative and other costs and expenses. The listing requirements of The NASDAQ Global Market
require that we satisfy certain corporate governance requirements relating to director independence,
distributing annual and interim reports, stockholder meetings, approvals and voting, soliciting proxies,
conflicts of interest and a code of conduct. Our management and other personnel need to devote a
substantial amount of time to ensure that we comply with all of these requirements.
We are subject to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, and the related
rules of the SEC that generally require our management and independent registered public accounting
firm to report on the effectiveness of our internal control over financial reporting. Section 404 requires
an annual management assessment, as well as an opinion from our independent registered public
accounting firm, on the effectiveness of our internal control over financial reporting.
We are in the costly and challenging process of evaluating and testing our internal controls for the
purpose of providing the reports required by these rules. We may not be able to complete our
evaluation, testing and any required remediation in a timely fashion. During the course of our review
and testing, we may identify deficiencies and be unable to remediate them before we must provide the
required reports. Furthermore, if we have a material weakness in our internal control over financial
reporting, we may not detect errors on a timely basis and our financial statements may be materially
misstated. We or our independent registered public accounting firm may not be able to conclude on an
ongoing basis that we have effective internal control over financial reporting, which could harm our
operating results, cause investors to lose confidence in our reported financial information and cause the
trading price of our stock to fall. In addition, we are required to timely file accurate quarterly and
annual reports with the SEC under the Securities Exchange Act of 1934, or the Exchange Act, as
amended. In order to report our results of operations and financial statements on an accurate and
timely basis, we depend on CROs to provide timely and accurate notice of their costs to us. Any failure
to report our financial results on an accurate and timely basis could result in sanctions, lawsuits,
delisting of our shares from The NASDAQ Global Market or other adverse consequences that would
materially harm our business.
Risks Related to the Securities Markets and Investment in our Common Stock
Our principal stockholders and management own a significant percentage of our stock and will be able to
exert significant control over matters subject to stockholder approval.
At December 31, 2016, our executive officers, directors and entities affiliated with certain of our
directors beneficially owned approximately 32.2% of our outstanding voting common stock. These
stockholders have the ability to influence us through their ownership position. These stockholders may
be able to determine the outcome of all matters requiring stockholder approval. For example, these
stockholders may be able to control elections of directors, amendments of our organizational
documents, or approval of any merger, sale of assets, or other major corporate transaction. This may
54
prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may
feel are in your best interest as one of our stockholders.
Sales of a substantial number of shares of our common stock in the public market by our existing
stockholders could cause our stock price to decline.
At December 31, 2016, certain holders of shares of our common stock held approximately
7.3 million shares of our common stock. Sales of a substantial number of shares of our common stock
in the public market, or the perception that these sales might occur, could depress the market price of
our common stock and could impair our ability to raise capital through the sale of additional equity
securities. We are unable to predict the effect that sales may have on the prevailing market price of our
common stock.
Market volatility may affect our stock price and the value of your investment.
The market price of our common stock may fluctuate significantly in response to a number of
factors, most of which we cannot control, including, among others:
• plans for, progress of or results from clinical efficacy or safety studies of bempedoic acid;
• guidance from or communications with the FDA regarding our ongoing or planned clinical
studies of bempedoic acid;
• the failure of or delay by of the FDA to approve bempedoic acid in our desired or expected
target indications or at all;
• announcements of new products, technologies, commercial relationships, acquisitions or other
events by us or our competitors;
• the success or failure of other LDL-C lowering therapies;
• regulatory or legal developments in the United States and other countries;
• failure of bempedoic acid, if approved, to achieve commercial success;
• fluctuations in stock market prices and trading volumes of similar companies;
• general market conditions and overall fluctuations in U.S. equity markets;
• variations in our quarterly operating results;
• changes in our financial guidance or securities analysts’ estimates of our financial performance;
• changes in accounting principles;
• our ability to raise additional capital and the terms on which we can raise it;
• sales of large blocks of our common stock, including sales by our executive officers, directors
and significant stockholders;
• additions or departures of key personnel;
• discussion of us or our stock price by the press and by online investor communities; and
• other risks and uncertainties described in these risk factors.
As a result, you may not be able to sell your shares of common stock at or above the price at
which you purchase them.
55
We may be at an increased risk of securities class action litigation.
Historically, securities class action litigation has often been brought against a company following a
decline in the market price of its securities. This risk is especially relevant for us because biotechnology
and pharmaceutical companies have experienced significant stock price volatility in recent years. For
example, as described further in Part I, Item 3—Legal Proceedings, a purported securities class action
lawsuit was filed in January 2016 naming us and certain of our officers as defendants. In December
2016, the court granted our motion to dismiss with prejudice and entered judgement in our favor. In
January 2017, the plaintiffs in this lawsuit filed a motion to alter or amend the judgement. Additionally,
in December 2016, a purported derivative action was filed in Delaware against certain of our directors
and officers. 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 offerings 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.
If securities or industry analysts cease publishing research or reports or publish misleading, inaccurate or
unfavorable research about us, our business or our market, our stock price and trading volume could decline.
The trading market for our common stock is influenced by the research and reports that securities
or industry analysts publish about us, our business, our market or our competitors. We only recently
started receiving research coverage by securities and industry analysts. If one or more of the industry
analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our
business, or provides more favorable relative recommendations about our competitors, our stock price
would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports
on us regularly, demand for our stock could decrease, which could cause our stock price or trading
volume to decline.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us,
even one that may be beneficial to our stockholders, more difficult and may prevent attempts by our
stockholders to replace or remove our current management.
Provisions in our certificate of incorporation and bylaws may delay or prevent an acquisition of us
or a change in our management. These provisions include a classified board of directors, a prohibition
on actions by written consent of our stockholders and the ability of our board of directors to issue
preferred stock without stockholder approval. In addition, because we are incorporated in Delaware, we
are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits
the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or
combine with us. Although we believe these provisions collectively provide for an opportunity to obtain
greater value for stockholders by requiring potential acquirors to negotiate with our board of directors,
they would apply even if an offer rejected by our board were considered beneficial by some
stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to
replace or remove our current management by making it more difficult for stockholders to replace
members of our board of directors, which is responsible for appointing the members of our
management.
56
We do not intend to pay dividends on our common stock and, consequently, your ability to achieve a return on
your investment will depend on appreciation in the price of our common stock.
We have never declared or paid any cash dividend on our common stock and do not currently
intend to do so in the foreseeable future. We currently anticipate that we will retain future earnings for
the development, operation and expansion of our business and do not anticipate declaring or paying
any cash dividends in the foreseeable future. Therefore, the success of an investment in shares of our
common stock will depend upon any future appreciation in their value. There is no guarantee that
shares of our common stock will appreciate in value or even maintain the price at which you purchased
them. Additionally, our ability to pay dividends on our common stock is limited by restrictions under
the terms of our Credit Facility with Oxford Finance LLC.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our corporate headquarters are located in Ann Arbor, Michigan where we lease and occupy
approximately 7,900 square feet of office space. We lease and occupy an additional 5,500 square feet of
office space in Ann Arbor, Michigan to support our clinical development operations. We believe our
current facilities will be sufficient to meet our needs until expiration.
Item 3. Legal Proceedings
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 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. 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 plaintiffs in this lawsuit filed a
motion to alter or amend the judgment.
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 our lead product candidate’s path to FDA
approval, and failed to ensure that reliable systems of internal controls were in place at the Company.
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. In light of, among other things, the early stage of the litigation, 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.
57
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 4. Mine Safety Disclosures
Not applicable.
58
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
PART II
of Equity Securities
Market Information
Our common stock began trading on the NASDAQ Global Market on June 26, 2013, under the
symbol ‘‘ESPR’’. Prior to that time there was no public market for our common stock. Shares sold in
our initial public offering which closed on July 1, 2013, were priced at $14.00 per share.
On December 31, 2016, the closing price for our common stock as reported on the NASDAQ
Global Market was $12.52. The following table sets forth the high and low sales prices per share of our
common stock as reported on the NASDAQ Global Market for the period indicated:
Year Ended December 31, 2016
High
Low
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$22.43
$20.19
$14.85
$14.33
$12.61
$ 9.58
$ 9.75
$ 9.40
Year Ended December 31, 2015
High
Low
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$118.95
$120.96
$100.98
$ 30.41
$41.00
$72.05
$18.07
$21.14
Stockholders
As of February 1, 2017, there were 12 stockholders of record, which excludes stockholders whose
shares were held in nominee or street name by brokers.
Performance Graph
The following graph illustrates a comparison of the total cumulative stockholder return for our
common stock since January 1, 2016, to two indices: the NASDAQ Composite Index and the NASDAQ
Biotechnology Index. The graph assumes an initial investment of $100 on January 1, 2016, in our
common stock, the stocks comprising the NASDAQ Composite Index, and the stocks comprising the
NASDAQ Biotechnology Index. Historical stockholder return is not necessarily indicative of the
performance to be expected for any future periods.
59
Comparison of 1 Year Cumulative Total Return*
Among Esperion Therapeutics, Inc., the NASDAQ Composite Index and
the NASDAQ Biotechnology Index
120.00
100.00
80.00
60.00
40.00
20.00
0.00
12/31/2015 1/31/2016
2/29/2016
3/31/2016
4/30/2016
5/31/2016
6/30/2016
7/31/2016
8/31/2016
9/30/2016 10/31/2016 11/30/2016 12/31/2016
Esperion Therapeutics, Inc.
NASDAQ Biotechnology Index
NASDAQ Composite - Total Returns
17FEB201714242969
*
$100 invested on January 1, 2016, in stock or index. Fiscal Year ending December 31.
The performance graph shall not be deemed to be incorporated by reference by means of any
general statement incorporating by reference this Form 10-K into any filing under the Securities Act of
1933, as amended or the Exchange Act, except to the extent that we specifically incorporate such
information by reference, and shall not otherwise be deemed filed under such acts.
Dividend Policy
We have never paid or declared any cash dividends on our common stock, and we do not
anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to
retain all available funds and any future earnings to fund the development and expansion of our
business. Any future determination to pay dividends will be at the discretion of our board of directors
and will depend upon a number of factors, including our results of operations, financial condition,
future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our
board of directors deems relevant. Additionally, our ability to pay dividends on our common stock is
limited by restrictions under the terms of our Credit Facility with Oxford Finance LLC.
Equity Compensation Plans
The information required by Item 5 of Form 10-K regarding equity compensation plans is
incorporated herein by reference to Item 11 of Part III of this Annual Report.
Issuer Purchases of Equity Securities
We did not purchase any of our registered equity securities during the period covered by this
Annual Report on Form 10-K.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
60
Item 6. Selected Financial Data
The selected financial data set forth below is derived from our audited consolidated financial
statements and may not be indicative of future operating results. The following selected consolidated
financial data should be read in conjunction with Item 7, ‘‘Management’s Discussion and Analysis of
Financial Condition and Results of Operations’’ and the consolidated financial statements and the
notes thereto included elsewhere in this report. The selected financial data in this section are not
intended to replace our consolidated financial statements and the related notes. Our historical results
are not necessarily indicative of our future results.
Three Months Ended December 31,
Years Ended December 31,
2016
2015
2014
2013
2012
2016
2015
2014
2013
2012
(in thousands, except share and per share data)
Operating expenses:
Research and development
General and administrative .
. $
24,881 $
4,404
7,956 $
5,278
6,200 $
3,180
7,338 $ 1,654 $
2,398
506
57,868 $
18,282
29,802 $
20,238
25,302 $
10,922
16,014 $ 7,998
2,206
6,745
Total operating expenses
Loss from operations .
.
Total other income (expense)
.
.
Net loss .
.
.
.
.
.
.
.
.
.
.
.
.
.
29,285
13,234
(29,285)
329
(13,234)
112
9,380
(9,380)
(77)
9,736
2,160
76,150
50,040
36,224
22,759
10,204
(9,736)
46
(2,160)
(615)
(76,150)
1,172
(50,040)
256
(36,224)
(151)
(22,759)
(3,329)
(10,204)
(1,538)
. $
(28,956) $
(13,122) $
(9,457) $
(9,690) $ (2,775) $
(74,978) $
(49,784) $
(36,375) $ (26,088) $ (11,742)
.
.
Net loss per common share
.
(basic and diluted) .
.
.
.
. $
(1.29) $
(0.58) $
(0.49) $
(0.63) $
(8.12) $
(3.33) $
(2.26) $
(2.22) $
(3.31) $ (36.31)
Weighted average shares
outstanding (basic and
.
.
diluted) .
.
.
.
.
.
.
.
.
.
22,554,418
22,515,136
19,276,639
15,340,713
341,935
22,544,475
22,019,818
16,374,102
7,885,921
323,382
The table below presents a summary of our balance sheet data as of December 31, 2016, 2015,
2014, 2013 and 2012:
2016
2015
2014
2013
2012
As of December 31,
(in thousands)
Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . . . . . .
Working capital (deficit) . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term debt . . . . . . . . . . . . . . . . . .
Common stock . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficit . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity (deficit) . . . . . . . .
$ 38,165
197,988
204,324
245,213
1,022
23
(229,200)
228,602
$ 77,336
208,769
215,240
295,572
2,688
23
(154,222)
287,259
$ 85,038
101,208
56,544
143,276
4,231
20
(104,438)
133,554
$ 56,537
56,417
21,062
78,294
—
15
(68,063)
74,091
$ 6,512
(10,035)
—
7,312
7,529
—
(41,975)
(41,365)
61
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
You should read the following discussion and analysis of our financial condition and results of
operations together with our consolidated financial statements and related notes appearing elsewhere in this
Annual Report on Form 10-K. In addition to historical information, this discussion and analysis contains
forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ
materially from those anticipated in these forward-looking statements as a result of certain factors. We
discuss factors that we believe could cause or contribute to these differences below and elsewhere in this
report, including those set forth under Item 1A. ‘‘Risk Factors’’ and under ‘‘Forward-Looking Statements’’ in
this Annual Report on Form 10-K.
Overview
Corporate Overview
We are the lipid management company, a late-stage pharmaceutical company focused on
developing and commercializing convenient, complementary, cost-effective, once-daily, oral therapies
for the treatment of patients with elevated 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 that will make a substantial impact on
reducing global cardiovascular disease, or CVD; the leading cause of death around the world. With a
targeted mechanism of action, bempedoic acid, our lead product candidate, is a first-in-class, orally
available, once-daily ACL inhibitor that reduces cholesterol biosynthesis and lowers elevated levels of
LDL-C by up-regulating the LDL receptor, but with reduced potential for muscle-related side effects.
In addition to bempedoic acid as monotherapy, we are also developing bempedoic acid in a fixed dose
combination with ezetimibe, an approved, non—statin, oral, LDL-C lowering therapy.
The clinical development program for bempedoic acid consists of two major components: 1) the
global pivotal Phase 3 LDL-C lowering program in high CVD risk patients with hypercholesterolemia
on optimized background lipid-modifying therapy, including maximally tolerated statins, and patients
who are only able to tolerate less than the lowest approved daily starting dose of their statin and are
considered ‘‘statin intolerant,’’ and 2) the global CVOT—known as Cholesterol Lowering via
BEmpedoic Acid, an ACL-inhibiting Regimen (CLEAR) Outcomes, in patients with
hypercholesterolemia and high CVD risk and who are considered ‘‘statin intolerant’’. We initiated our
global Phase 3 clinical development program in January 2016, with the 52-week global pivotal Phase 3
long-term safety study and tolerability (Study 1), and initiated the three remaining global pivotal
LDL-C lowering efficacy studies in December 2016. We expect to report top-line results from our
global Phase 3 program in its entirety by mid-2018, and intend to use positive results from our Phase 3
program to support our submissions for an LDL-C lowering indication in the U.S. and Europe by the
first half of 2019. We also initiated the CLEAR Outcomes CVOT in December 2016, and intend to use
positive results from this CVOT to support our submissions for a CV risk reduction indication in the
U.S. and Europe by 2022.
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, for which we recently initiated a global long-term safety study in January
2016. 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 and the incurrence of
indebtedness, and we have incurred losses in each year since our inception. We own the exclusive
worldwide rights to bempedoic acid.
We have not commenced principal operations and do not have any products approved for sale. To
date, we have not generated any revenue. We have never been profitable and our net losses were
$75.0 million, $49.8 million, and $36.4 million for the years ended December 31, 2016, 2015 and 2014,
62
respectively. Substantially all of our net losses resulted from costs incurred in connection with research
and development programs, general and administrative costs associated with our operations. We expect
to incur significant expenses and increasing operating losses for the foreseeable future. We expect our
expenses to increase in connection with our ongoing activities, including, among others:
• completing the clinical development of bempedoic acid;
• undertaking the clinical development activities for the fixed dose combination of bempedoic acid
and ezetimibe, or BA+EZ;
• completing the global pivotal Phase 3 LDL-C lowering program and the CLEAR Outcomes
CVOT for bempedoic acid;
• seeking regulatory approval for bempedoic acid;
• commercializing bempedoic acid; and
• operating as a public company.
Accordingly, we will need additional financing to support our continuing operations. We will seek
to fund our operations through public or private equity or debt financings or through other sources,
which may include collaborations with third parties. 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
With a targeted mechanism of action, bempedoic acid is a first-in-class, orally available, once-daily
ACL inhibitor that reduces cholesterol biosynthesis and lowers elevated levels of LDL-C by
up-regulating the LDL receptor, but with reduced potential for muscle-related side effects. Bempedoic
acid is being developed for patients with hypercholesterolemia. We acquired the rights to bempedoic
acid from Pfizer in 2008. We own the exclusive worldwide rights to bempedoic acid and we are not
obligated to make any royalty or milestone payments to Pfizer.
During the year ended December 31, 2016, we incurred $36.2 million in expenses related to the
four studies in our global pivotal Phase 3 LDL-C lowering program in high CVD risk patients with
hypercholesterolemia on optimized background lipid-modifying therapy, including maximally tolerated
statins, and patients who are only able to tolerate less than the lowest approved daily starting dose of
their statin and are considered ‘‘statin intolerant,’’ our CLEAR Outcomes CVOT in patients with
hypercholesterolemia and high CVD risk and who are considered ‘‘statin intolerant,’’ our Phase 2 PK/
PD (1002-035) study in patients treated with high-dose statin therapy, our Phase 1 PK (1002-037) study
and other clinical pharmacology studies.
During the year ended December 31, 2015, we incurred $12.0 million in expenses related to our
Phase 2 clinical study in patients with elevated LDL-C already receiving statin therapy (1002-009), our
Phase 2 exploratory clinical safety study in patients with both elevated LDL-C and hypertension
(1002-014), our Phase 3 global long-term safety study in patients with hyperlipidemia whose LDL-C is
not adequately controlled with low- and moderate-dose statins (1002-040) and other clinical
pharmacology studies.
During the year ended December 31, 2014, we incurred $14.5 million in expenses related to our
Phase 2 clinical study in patients with elevated LDL-C with or without ‘‘statin intolerance’’ (1002-008),
our Phase 2 clinical study in patients with elevated LDL-C already receiving statin therapy (1002-009),
63
our Phase 2 exploratory clinical safety study in patients with both elevated LDL-C and
hypertension (1002-014) and other clinical pharmacology studies.
Financial Operations Overview
Revenue
To date, we have not generated any revenue. In the future, we may never generate revenue from
the sale of bempedoic acid or other product candidates. If we fail to complete the development of
bempedoic acid 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.
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,
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;
• 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. 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 research and development expenses are expected to increase in the foreseeable future. Costs
associated with bempedoic acid will increase as we further its clinical development, including in
connection with the commencement of our global pivotal Phase 3 LDL-C lowering program and our
CLEAR Outcomes CVOT. We also expect to incur increased research and development costs as we
pursue the clinical development of BA + EZ. We cannot determine with certainty the duration and
completion costs associated with the ongoing or future clinical studies of bempedoic acid. Also, we
cannot conclude with certainty if, or when, we will generate revenue from the commercialization and
sale of bempedoic acid, if ever. We may never succeed in obtaining regulatory approval for bempedoic
acid. The duration, costs and timing associated with the development and commercialization of
bempedoic acid will depend on a variety of factors, including uncertainties associated with the results of
our clinical studies and our ability to obtain regulatory approval. For example, if the FDA or another
regulatory authority were to require us to conduct clinical studies beyond those that we currently
anticipate will be required for the completion of clinical development or post-commercialization clinical
studies of bempedoic acid, or if we experience significant delays in enrollment in any of our clinical
64
studies, 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.
General and Administrative Expenses
General and administrative expenses primarily consist of salaries and related costs for personnel,
including stock-based compensation, associated with our executive, accounting and finance, operational
and other administrative functions. Other general and administrative expenses include facility-related
costs, communication expenses and professional fees for legal, patent prosecution, protection and
review, consulting and accounting services.
We anticipate that our general and administrative expenses will increase in the future in
connection with the continued research and development and commercialization of bempedoic acid,
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, including the additional complexities and related
costs of our transition away from being an ‘‘emerging growth company’’ under the rules of the SEC.
These increases will likely include higher legal, compliance, accounting and investor and public relations
expenses.
Interest Expense
Interest expense consists primarily of cash interest costs 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. 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 and stock-based
compensation. 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.
Our significant accounting policies are described in more detail in Note 2 to our audited financial
statements appearing elsewhere in this Annual Report on Form 10-K. We believe the following
accounting policies to be most critical to understanding our results and financial operations.
Accrued Clinical Development Costs
As part of the process of preparing our financial statements we are required to estimate our
accrued expenses. We base our accrued expenses related to clinical studies on estimates of patient
enrollment and related expenses at clinical investigator sites as well as estimates for the services
received and efforts expended pursuant to contracts with multiple research institutions and CROs that
conduct and manage clinical studies on our behalf. We generally accrue expenses related to clinical
studies based on contracted amounts applied to the level of patient enrollment and activity according to
the protocol. If timelines or contracts are modified based upon changes in the clinical study protocol or
scope of work to be performed, we modify our estimates of accrued expenses accordingly on a
65
prospective basis. If we do not identify costs that we have begun to incur or if we underestimate or
overestimate the level of services performed or the costs of these services, our actual expenses could
differ from our estimates. We do not anticipate the future settlement of existing accruals to differ
materially from our estimates.
Stock-Based Compensation
We typically grant stock-based compensation to new employees in connection with their
commencement of employment and to existing employees in connection with annual performance
reviews. We account for all stock-based compensation payments issued to employees, consultants and
directors using an option-pricing model for estimating fair value. Accordingly, stock-based
compensation expense is measured based on the estimated fair value of the awards on the date of
grant, net of estimated forfeitures. Compensation expense is recognized for the portion that is
ultimately expected to vest over the period during which the recipient renders the required services to
us using the straight-line method. In accordance with authoritative guidance, the fair value of
non-employee stock-based awards is remeasured as the awards vest, and the resulting value, if any, is
recognized as expense during the period the related services are rendered.
Significant Factors, Assumptions and Methodologies Used in Determining Fair Value
We estimate the fair value of our stock-based awards to employees, consultants and directors using
the Black-Scholes option-pricing model. The Black-Scholes model requires the input of subjective
assumptions, including (a) the per share fair value of our common stock, (b) the expected stock price
volatility, (c) the calculation of the expected term of the award, (d) the risk free interest rate and
(e) expected dividends. Due to our limited operating history and a lack of company-specific historical
and implied volatility data, we have based our estimate of expected volatility on the historical volatility
of a group of similar companies, which are publicly traded. When selecting these public companies on
which we have based our expected stock price volatility, we selected companies with comparable
characteristics to us, including enterprise value, risk profiles, position within the industry, and with
historical share price information sufficient to meet the expected life of our stock-based awards. The
historical volatility data was computed using the daily closing prices for the selected companies’ shares
during the equivalent period of the calculated expected term of our stock-based awards. We will
continue to apply this process until a sufficient amount of historical information regarding the volatility
of our own stock price becomes available. We have estimated the expected life of our employee stock
options using the ‘‘simplified’’ method, whereby, the expected life equals the arithmetic average of the
vesting term and the original contractual term of the option. The risk-free interest rates for periods
within the expected life of the option are based on the U.S. Treasury yield curve in effect during the
period the options were granted. We have never paid, and do not expect to pay, dividends in the
foreseeable future.
We are also required to estimate forfeitures at the time of grant, and revise those estimates in
subsequent periods if actual forfeitures differ from our estimates. We use historical data to estimate
pre-vesting option forfeitures and record stock-based compensation expense only for those awards that
are expected to vest. To the extent that actual forfeitures differ from our estimates, the difference is
recorded as a cumulative adjustment in the period the estimates were revised.
Fair Value Estimate
We are required to estimate the fair value of the common stock underlying our stock-based awards
when performing the fair value calculations with the Black-Scholes option-pricing model. All options to
purchase shares of our common stock are intended to be granted with an exercise price per share no
less than the fair value per share of our common stock underlying those options on the date of grant,
based on the information known to us on the date of grant.
66
Recent Accounting Pronouncements
In August 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards
Update, or ASU, 2014-15 which requires management of public companies to evaluate whether there
are conditions and events that raise substantial doubt about the entity’s ability to continue as a going
concern within one year after the financial statements are issued and, if so, to disclose that fact.
Management will be required to make this evaluation for both annual and interim reporting periods, if
applicable. Management is also required to evaluate and disclose whether its plans alleviate that doubt.
The standard is effective for annual periods ending after December 15, 2016, and interim periods
within annual periods beginning after December 15, 2016. The adoption of this standard did not have a
material impact on our financial position, results of operations or related financial statement
disclosures.
In February 2016, the FASB issued ASU 2016-02 which is intended to improve financial reporting
about leasing transactions. The updated guidance will require a lessee to recognize assets and liabilities
for leases with lease terms of more than twelve months. Consistent with current GAAP, the recognition,
measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will
depend on its classification as a capital or operating lease. Unlike current GAAP—which requires only
capital leases to be recognized on the balance sheet—the updated guidance will require both types of
leases to be recognized on the balance sheet. The standard is effective for public companies for fiscal
years beginning after December 15, 2018, and interim periods within those years. Early adoption is
permitted for annual or interim reporting periods for which the financial statements have not previously
been issued. We do not believe the adoption of this standard will have a material impact on our
financial position, results of operations or related financial statement disclosures.
In March 2016, the FASB issued ASU 2016-09 which includes provisions intended to simplify the
various aspects related to how share-based payments are accounted for and presented in the financial
statements. The updated guidance will include income tax consequences on the income statement and
the classification of the tax impact on the statement of cash flows. Additionally, under the updated
guidance companies will have to elect whether to account for forfeitures of share-based payments by
(1) recognizing forfeitures as they occur or (2) estimating the number of awards expected to be
forfeited and adjusting the estimate when it is likely to change, as is currently required. The standard is
effective for public business entities for fiscal years beginning after December 15, 2016, and interim
periods within those years. Early adoption is permitted for annual or interim reporting periods for
which the financial statements have not previously been issued. We do not believe the adoption of this
standard will have a material impact on our financial position, results of operations or related financial
statement disclosures.
67
Results of Operations
Comparison of the Years Ended December 31, 2016 and 2015
The following table summarizes our results of operations for the years ended December 31, 2016
and 2015:
Year Ended
December 31,
2016
2015
Change
(in thousands)
Operating Expenses:
Research and development . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . .
Loss from operations . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . .
$ 57,868
18,282
$ 29,802
20,238
$ 28,066
(1,956)
(76,150)
(50,040)
(26,110)
(376)
1,548
(520)
776
144
772
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(74,978) $(49,784) $(25,194)
Research and development expenses
Research and development expenses for the year ended December 31, 2016, were $57.9 million
compared to $29.8 million for the year ended December 31, 2015, an increase of $28.1 million. The
increase in research and development expenses was primarily related to the further clinical
development of bempedoic acid, including costs to support the initiation of the three global pivotal
Phase 3 studies and the CVOT, and further increases in our headcount and stock-based compensation
expense.
General and administrative expenses
General and administrative expenses for the year ended December 31, 2016, were $18.3 million
compared to $20.2 million for the year ended December 31, 2015, a decrease of approximately
$1.9 million. The decrease in general and administrative expenses was primarily related to a reduction
in pre-commercialization activities, partially offset by increases in costs to support public company
operations, increases in our headcount, and other costs to support our growth.
Interest expense
Interest expense for the year ended December 31, 2016, was $0.4 million compared to $0.5 million
for the year ended December 31, 2015. Interest expense was related to our credit facility with Oxford
Finance LLC.
Other income, net
Other income, net for the year ended December 31, 2016, was $1.5 million compared to
$0.8 million for the year ended December 31, 2015. This increase was primarily related to an increase
in interest income earned on our cash, cash equivalents and investment securities.
68
Results of Operations
Comparison of the Years Ended December 31, 2015 and 2014
The following table summarizes our results of operations for the years ended December 31, 2015
and 2014:
Year Ended
December 31,
2015
2014
Change
(in thousands)
Operating Expenses:
Research and development . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . .
Loss from operations . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . .
$ 29,802
20,238
$ 25,302
10,922
$ 4,500
9,316
(50,040)
(36,224)
(13,816)
(520)
776
(270)
119
(250)
657
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(49,784) $(36,375) $(13,409)
Research and development expenses
Research and development expenses for the year ended December 31, 2015, were $29.8 million
compared to $25.3 million for the year ended December 31, 2014, an increase of $4.5 million. Research
and development expenses were primarily related to the further clinical development of bempedoic
acid, including completing our Phase 2 clinical study in patients with elevated LDL-C already receiving
statin therapy (1002-009), our Phase 2 exploratory clinical safety study in patients with elevated LDL-C
and hypertension (1002-014) and our Phase 3 global long-term safety study in patients with
hyperlipidemia whose LDL-C is not adequately controlled with low- and moderate-dose statins
(1002-040).
General and administrative expenses
General and administrative expenses for the year ended December 31, 2015, were $20.2 million
compared to $10.9 million for the year ended December 31, 2014, an increase of $9.3 million. The
increase in general and administrative expenses was primarily attributable to costs associated with
pre-commercialization activities for bempedoic acid, increases in our headcount, which includes
increased stock-based compensation expense for awards granted during the period, and other costs to
support public company operations and our growth.
Interest expense
Interest expense for the year ended December 31, 2015, was $0.5 million compared to $0.3 million
for the year ended December 31, 2014. Interest expense was related to our credit facility with Oxford
Finance LLC.
Other income, net
Other income, net for the year ended December 31, 2015, was approximately $0.8 million
compared to approximately $0.1 million for the year ended December 31, 2014. This increase was
primarily related to an increase in interest income earned on our cash, cash equivalents and investment
securities.
69
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 and the incurrence of
indebtedness. In June 2014, we entered into a loan and security agreement (the credit facility) with
Oxford Finance LLC whereby we received net proceeds of $4.9 million from the issuance of secured
promissory notes under a term loan as part of the facility. In October 2014, we sold 4,887,500 shares of
common stock at a price of $20.00 per share, less underwriting discounts and commissions, for net
proceeds of $91.6 million. In March 2015, we sold 2,012,500 shares of common stock at a price of
$100.00 per share, less underwriting discounts and commissions, for net proceeds of $190.0 million. To
date, we have not generated any revenue and we anticipate that we will continue to incur losses for the
foreseeable future.
As of December 31, 2016, our primary sources of liquidity were our cash and cash equivalents and
available-for-sale investments, which totaled $38.2 million and $204.3 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:
Cash used in operating activities . . . . . . . . . . . . . . . . . . . . . .
Cash provided by (used) in investing activities . . . . . . . . . . . .
Cash (used in) provided by financing activities . . . . . . . . . . . .
Year Ended
December 31,
2016
2015
(in thousands)
$(47,730) $ (38,156)
(160,068)
190,522
10,118
(1,559)
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . .
$(39,171) $
(7,702)
Operating Activities
We have incurred, and expect to continue to incur, significant costs in the areas of research and
development, regulatory and other clinical study costs, associated with our development of bempedoic
acid and our operations.
Net cash used in operating activities totaled $47.7 million and $38.2 million for the years ended
December 31, 2016 and 2015, respectively. The primary use of our cash was to fund the development
of bempedoic acid, adjusted for non-cash expenses such as stock-based compensation expense,
depreciation and amortization and changes in working capital.
Investing Activities
Net cash provided by investing activities of $10.1 million for the year ended December 31, 2016,
consisted primarily of proceeds from maturities of highly liquid, interest bearing investment-grade and
government securities. Net cash used in investing activities of $160.1 million for the year ended
December 31, 2015, consisted primarily of purchases of highly liquid, interest bearing investment-grade
and government securities.
Financing Activities
Net cash used in financing activities of $1.6 million for the year ended December 31, 2016, related
primarily to payments on our credit facility. Net cash provided by financing activities of $190.5 million
70
for the year ended December 31, 2015, related primarily to the proceeds of our underwritten public
offering of common stock.
Plan of Operations and Funding Requirements
We expect to continue to incur significant expenses and increasing operating losses for the
foreseeable future as we progress through the clinical development program for bempedoic acid. We
estimate that current cash resources are sufficient to fund operations into early 2019 and through the
announcement of top-line results from all global pivotal Phase 3 safety and efficacy studies. We will
likely need to raise additional capital to continue to fund the further development and
commercialization efforts for bempedoic acid and our operations, including to fund our initial
submissions for an LDL-C lowering indication in the U.S. and Europe and to complete the CLEAR
Outcomes CVOT. 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. Because of the numerous risks
and uncertainties associated with the development and commercialization of bempedoic acid and the
extent to which we may enter into collaborations with pharmaceutical partners regarding the
development and commercialization of bempedoic acid, we are unable to estimate the amounts of
increased capital outlays and operating expenses associated with completing the development and
commercialization of bempedoic acid. Our future funding requirements will depend on many factors,
including, but not limited to:
• our ability to successfully develop and commercialize bempedoic acid or other product
candidates;
• the costs, timing and outcomes of our ongoing and planned clinical studies of bempedoic acid;
• the time and cost necessary to obtain regulatory approvals for bempedoic acid, if at all;
• our ability to establish a sales, marketing and distribution infrastructure to commercialize
bempedoic acid or our ability to establish any future collaboration or commercialization
arrangements on favorable terms, if at all;
• 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.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our
cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances
and licensing arrangements. We do not have any committed external source of funds. 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, 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, 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. If we are unable to raise additional funds through equity or debt financings or through
collaborations, strategic alliances or licensing arrangements or royalty-based financing arrangements
when needed, we may be required to delay, limit, reduce or terminate our product development or
future commercialization efforts or grant rights to develop and market bempedoic acid that we would
otherwise prefer to develop and market ourselves.
71
Contractual Obligations and Commitments
We were originally party to a single lease that covered both office and laboratory space in
Plymouth, Michigan. The Plymouth lease, as amended over time, was scheduled to expire in April 2014.
In February 2014, we signed a new lease to move our principal executive offices to Ann Arbor,
Michigan, while still maintaining our laboratory space in Plymouth. The Ann Arbor lease has a term of
63 months and provides for fixed monthly rent of approximately $7,900, with monthly rent increasing
every 12 months, and also provides for certain rent adjustments to be paid as determined by the
landlord. In May 2014, we amended the Plymouth lease to (i) extend the expiration date from April
2014, to April 2017, (ii) adjust the rentable space to 3,045 square feet, (iii) adjust our proportionate
share of the landlord’s expenses and taxes to 7.40%, (iv) extend our option to renew for one term of
three years through written notice to the landlord by February 2017, and (v) decrease the annual base
rent to $37,000, subject to certain increases and adjustments. In August 2015, we signed a new lease to
increase our office space in Ann Arbor, Michigan to support our growing company and clinical
development operations. The second Ann Arbor lease has a term of 49 months and provides for fixed
monthly rent of approximately $7,100, with monthly rent increasing every 12 months. In December
2015, we terminated our lease for our laboratory space in Plymouth, Michigan, effective retroactively
on October 30, 2015, rather than April 30, 2017, as originally contemplated in the Plymouth lease.
In June 2014, we entered into a Credit Facility which provided for initial borrowings of
$5.0 million and additional borrowings of $15.0 million until March 2015. We received proceeds of
$4.9 million, net of issuance costs, from the issuance of secured promissory notes under a term loan as
part of the Credit Facility and we have not drawn upon any additional borrowings. Under the Credit
Facility we are obligated to make monthly, interest-only payments on any term loans funded until
July 1, 2015, and, thereafter, to pay 36 consecutive, equal monthly installments of principal and interest
from August 1, 2015, through July 1, 2018. The term loan outstanding under the Credit Facility bears
interest at an annual rate of 6.40%. In addition, a final payment equal to 8.0% of any amounts drawn
under the Credit Facility is due upon the earlier of the maturity date or prepayment of the term loans.
The following table summarizes our future minimum contractual obligations as of December 31,
2016:
Total
Less than
1 Year
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . .
Debt commitments(1) . . . . . . . . . . . . . . . . . . . . . .
$ 520
3,307
$ 191
1,836
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,827
$2,027
1 - 3 Years
3 - 5 Years
(in thousands)
$ 329
1,471
$1,800
$—
—
$
More than
5 Years
$—
—
$—
(1) The amounts in the table reflect the contractually required principal and fixed interest payments in
accordance with the payment schedule. The projected fixed interest payment obligations are based
upon debt outstanding as of the balance sheet date and assume retirement at the scheduled
maturity date of the loan.
There have been no material changes to our contractual obligations and commitments outside the
ordinary course of business from those disclosed above.
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.
72
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We had cash and cash equivalents and available-for-sale investments of approximately $38.2 million
and $204.3 million, respectively, at December 31, 2016. 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
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.
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 year ended
December 31, 2016.
Item 8. Financial Statements and Supplementary Data
The financial statements required to be filed pursuant to this Item 8 are appended to this report.
An index of those financial statements is found in Item 15.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. 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 principal financial
officer, to allow timely decisions regarding required disclosure.
As of December 31, 2016, 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 has concluded based upon the
evaluation described above that, as of December 31, 2016, our disclosure controls and procedures were
effective at the reasonable assurance level.
73
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting for our company. Internal control over financial reporting is defined in
Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under
the supervision of, the company’s principal executive and principal financial officer and effected by the
company’s board of preparation of financial statements for external purposes in accordance with GAAP
and directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the includes those policies and procedures that: (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of our company are being made only
in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of our company’s assets that could have a material effect on the financial statements.
Internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements prepared for external
purposes in accordance with generally accepted accounting principles. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
Our management, with the participation of our principal executive and principal financial officer,
assessed the effectiveness of our internal control over financial reporting as of December 31, 2016,
based on criteria for effective internal control over financial reporting established in Internal Control—
Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on its assessment, management concluded that our internal control over
financial reporting was effective as of December 31, 2016, based on those criteria.
The effectiveness of our internal control over financial reporting as of December 31, 2016, has
been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in
their report which is included herein.
Changes in Internal Control over Financial Reporting
There were no changes to 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.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Esperion Therapeutics, Inc.
We have audited Esperion Therapeutics, Inc.’s internal control over financial reporting as of
December 31, 2016, based on criteria established in Internal Control—Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the
COSO criteria). Esperion Therapeutics, Inc.’s management is responsible for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control
over financial reporting included in the accompanying Management’s Report on Internal Control over
74
Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over
financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Esperion Therapeutics, Inc. maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2016, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the balance sheets of Esperion Therapeutics, Inc. as of December 31,
2016 and 2015, and the related statements of operations and comprehensive loss, stockholders’ equity
and cash flows for each of the three years in the period ended December 31, 2016 of Esperion
Therapeutics, Inc. and our report dated February 22, 2017, expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Detroit, Michigan
February 22, 2017
Item 9B. Other Information
None.
75
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this Item is incorporated herein by reference to the information that
will be contained in our proxy statement related to the 2017 Annual Meeting of Stockholders, which we
intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal
year pursuant to General Instruction G(3) of Form 10-K.
Item 11. Executive Compensation
The information required by this Item is incorporated herein by reference to the information that
will be contained in our proxy statement related to the 2017 Annual Meeting of Stockholders, which we
intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal
year pursuant to General Instruction G(3) of Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information required by this Item is incorporated herein by reference to the information that
will be contained in our proxy statement related to the 2017 Annual Meeting of Stockholders, which we
intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal
year pursuant to General Instruction G(3) of Form 10-K.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated herein by reference to the information that
will be contained in our proxy statement related to the 2017 Annual Meeting of Stockholders, which we
intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal
year pursuant to General Instruction G(3) of Form 10-K.
Item 14. Principal Accounting Fees and Services
The information required by this Item is incorporated herein by reference to the information that
will be contained in our proxy statement related to the 2017 Annual Meeting of Stockholders, which we
intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal
year pursuant to General Instruction G(3) of Form 10-K.
76
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this report:
(1) Financial Statements:
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Operations and Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
(2) Financial Statement Schedules:
All financial statement schedules have been omitted because they are not applicable, not
required or the information required is shown in the financial statements or the notes thereto.
(3) Exhibits. The exhibits filed as part of this Annual Report on Form 10-K are set forth on the
Exhibit Index immediately following our consolidated financial statements. The Exhibit Index is
incorporated herein by reference.
Item 16. Form 10-K Summary
Not applicable
77
Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized.
SIGNATURES
ESPERION THERAPEUTICS, INC.
Date: February 22, 2017
By:
/s/ TIM M. MAYLEBEN
Tim M. Mayleben
President and Chief Executive Officer
(Principal Executive Officer and
Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on
Form 10-K has been signed by the following persons in the capacities indicated below and on the dates
indicated:
Signature
Title
Date
/s/ TIM M. MAYLEBEN
Tim M. Mayleben
President, Chief Executive
Officer and Director
(Principal Executive Officer
and Principal Financial
Officer)
February 22, 2017
/s/ RICHARD B. BARTRAM
Richard B. Bartram
Vice President, Finance
(Principal Accounting Officer)
February 22, 2017
/s/ SCOTT BRAUNSTEIN, M.D.
Scott Braunstein, M.D.
/s/ DOV A. GOLDSTEIN, M.D.
Dov A. Goldstein, M.D.
Director
February 22, 2017
Director
February 22, 2017
/s/ ANTONIO M. GOTTO, M.D., D. PHIL
Antonio M. Gotto, M.D., D. Phil
Director
February 22, 2017
/s/ DANIEL JANNEY
Daniel Janney
Director
February 22, 2017
78
Signature
Title
Date
/s/ MARK E. MCGOVERN, M.D.
Mark E. McGovern, M.D.
Director
February 22, 2017
/s/ ROGER S. NEWTON, PH.D., FAHA, FACN
Roger S. Newton, Ph.D., FAHA, FACN
Director
February 22, 2017
/s/ GILBERT S. OMENN, M.D., PH.D.
Gilbert S. Omenn, M.D., Ph.D.
Director
February 22, 2017
/s/ NICOLE VITULLO
Nicole Vitullo
Director
February 22, 2017
79
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Esperion Therapeutics, Inc.
Index to the Financial Statements
Contents
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Financial Statements
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Operations and Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
F-1
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Esperion Therapeutics, Inc.
We have audited the accompanying balance sheets of Esperion Therapeutics, Inc. as of
December 31, 2016 and 2015, and the related statements of operations and comprehensive loss,
stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2016.
These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of Esperion Therapeutics, Inc. at December 31, 2016 and 2015, and the results of
its operations and its cash flows for each of the three years in the period ended December 31, 2016, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Esperion Therapeutics, Inc.’s internal control over financial reporting
as of December 31, 2016, based on criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)
and our report dated February 22, 2017, expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Detroit, Michigan
February 22, 2017
F-2
Esperion Therapeutics, Inc.
Balance Sheets
(in thousands, except share data)
December 31,
2016
December 31,
2015
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid clinical development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other prepaid and current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 38,165
173,418
560
1,434
$ 77,336
134,925
888
1,245
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
213,577
214,394
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
674
56
30,906
807
56
80,315
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 245,213
$ 295,572
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued clinical development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt, net of discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,595
1,709
8,138
1,147
15,589
1,022
16,611
$
707
1,604
2,191
1,123
5,625
2,688
8,313
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 December 31, 2016 and
December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $0.001 par value; 120,000,000 shares authorized as of
December 31, 2016 and December 31, 2015; 22,555,413 shares issued
and outstanding at December 31, 2016; 22,518,907 shares issued and
22,516,508 outstanding at December 31, 2015 . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
23
457,951
(172)
(229,200)
23
441,940
(482)
(154,222)
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
228,602
287,259
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 245,213
$ 295,572
See accompanying notes to the financial statements.
F-3
Esperion Therapeutics, Inc.
Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
Year Ended December 31,
2016
2015
2014
Operating expenses:
. . . . . . . . . . . . . . . . . . . . . . .
Research and development
General and administrative . . . . . . . . . . . . . . . . . . . . . . .
$
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
57,868
18,282
76,150
$
29,802
20,238
50,040
25,302
10,922
36,224
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(76,150)
(50,040)
(36,224)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net
(376)
1,548
(520)
776
(270)
119
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss per common share (basic and diluted) . . . . . . . . . . .
$
$
(74,978) $
(49,784) $
(36,375)
(3.33) $
(2.26) $
(2.22)
Weighted-average shares outstanding (basic and diluted) . . . .
22,544,475
22,019,818
16,374,102
Other comprehensive loss:
Unrealized gain (loss) on investments . . . . . . . . . . . . . . . .
Total comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
310
$
(423) $
(56)
(74,668) $
(50,207) $
(36,431)
See accompanying notes to the financial statements.
F-4
Esperion Therapeutics, Inc.
Statements of Stockholders’ Equity
(in thousands, except share data)
Common Stock
Shares
Amount
Deficit
Accumulated
Additional During the
Accumulated
Other
Total
Paid-In Development Comprehensive Stockholders’
Capital
Equity
Stage
Loss
Balance December 31, 2013 . . . . . . . . 15,357,413
$15
$142,142 $ (68,063)
$
(3)
$ 74,091
Issuance of common stock from
public offering, net of issuance
costs ($260)
. . . . . . . . . . . . . . . .
Issuance of warrants in connection
4,887,500
5
91,620
with issuance of notes . . . . . . . . .
— —
78
—
—
Early exercise of stock options and
vesting of restricted stock . . . . . . .
Exercise of stock options . . . . . . . . .
Stock-based compensation . . . . . . . .
Other comprehensive loss . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . .
— —
107,963 —
— —
— —
— —
—
39
—
473
—
3,679
—
—
— (36,375)
Balance December 31, 2014 . . . . . . . . 20,352,876
20
238,031
(104,438)
—
—
—
—
—
(56)
—
(59)
91,625
78
39
473
3,679
(56)
(36,375)
133,554
2,012,500
3
189,980
—
—
189,983
Issuance of common stock from
public offering, net of issuance
costs ($199)
. . . . . . . . . . . . . . . .
Early exercise of stock options and
vesting of restricted stock . . . . . . .
Exercise of stock options . . . . . . . . .
Exercise of warrants . . . . . . . . . . . .
Stock-based compensation . . . . . . . .
Other comprehensive loss . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . .
— —
128,086 —
25,445 —
— —
— —
— —
26
—
1,177
—
—
—
12,726
—
—
—
— (49,784)
Balance December 31, 2015 . . . . . . . . 22,518,907
23
441,940
(154,222)
Early exercise of stock options and
vesting of restricted stock . . . . . . .
Exercise of stock options . . . . . . . . .
Vesting of restricted stock units . . . .
Stock-based compensation . . . . . . . .
Other comprehensive gain . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . .
— —
27,757 —
8,749 —
— —
— —
— —
—
9
—
45
—
—
—
15,957
—
—
— (74,978)
—
—
—
—
(423)
—
(482)
—
—
—
—
310
—
26
1,177
—
12,726
(423)
(49,784)
287,259
9
45
—
15,957
310
(74,978)
Balance December 31, 2016 . . . . . . . . 22,555,413
$23
$457,951 $(229,200)
$(172)
$228,602
See accompanying notes to the financial statements.
F-5
Esperion Therapeutics, Inc.
Statements of Cash Flows
(in thousands)
Operating activities
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt discount
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . .
Amortization of premiums and discounts on investments . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . .
Loss related to assets held for sale . . . . . . . . . . . . . . . . . . . . . . .
Loss on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities:
Prepaids and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2016
2015
2014
$ (74,978) $ (49,784) $(36,375)
252
21
23
1,014
15,957
—
—
139
3,888
5,954
236
29
32
647
12,726
—
47
(1,275)
(1,333)
519
160
15
16
202
3,679
29
2
(264)
(299)
814
Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . .
(47,730)
(38,156)
(32,021)
Investing activities
Purchases of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales/maturities of investments . . . . . . . . . . . . . . . . .
Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . . .
Financing activities
Proceeds from issuance of common stock, net of issuance costs . . . .
Proceeds from exercise of common stock options . . . . . . . . . . . . . .
Proceeds from warrant issuance . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from debt issuance, net of issuance costs . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on long-term debt
(197,230)
207,442
—
(94)
(280,559)
120,792
24
(325)
(48,088)
12,351
12
(873)
10,118
(160,068)
(36,598)
—
45
—
—
(1,604)
189,983
1,177
—
—
(638)
91,731
473
78
4,838
—
97,120
28,501
56,537
Net cash (used in) provided by financing activities . . . . . . . . . . . . .
(1,559)
190,522
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . .
(39,171)
77,336
(7,702)
85,038
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . .
$ 38,165
$ 77,336
$ 85,038
See accompanying notes to the financial statements.
F-6
Esperion Therapeutics, Inc.
Notes to the Financial Statements
1. The Company and Basis of Presentation
The Company is the lipid management company, a late-stage pharmaceutical company focused on
developing and commercializing convenient, complementary, cost-effective, once-daily oral therapies for
the treatment of patients with elevated 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 that will make a substantial impact on reducing global
cardiovascular disease (‘‘CVD’’); the leading cause of death around the world. With a targeted
mechanism of action, bempedoic acid, the Company’s lead product candidate, is a first-in-class, orally
available, once-daily ATP-citrate lyase (‘‘ACL’’) inhibitor that reduces cholesterol biosynthesis and
lowers elevated levels of LDL-C by up-regulating the LDL receptor, but with reduced potential for
muscle-related side effects. In addition to bempedoic acid as monotherapy, the Company is also
developing bempedoic acid in a fixed dose combination with ezetimibe, an approved, non—statin, oral,
LDL-C lowering therapy.
The clinical development program for bempedoic acid consists of two major components: 1) the
global pivotal Phase 3 LDL-C lowering program in high CVD risk patients with hypercholesterolemia
on optimized background lipid-modifying therapy, including maximally tolerated statins, and patients
who are only able to tolerate less than the lowest approved daily starting dose of their statin and are
considered ‘‘statin intolerant,’’ and 2) the global CVOT—known as Cholesterol Lowering via
BEmpedoic Acid, an ACL-inhibiting Regimen (CLEAR) Outcomes, in patients with
hypercholesterolemia and high CVD risk and who are considered ‘‘statin intolerant’’. The Company
initiated the global Phase 3 clinical development program in January 2016, with the 52-week global
pivotal Phase 3 long-term safety study (Study 1), and initiated the three remaining global pivotal
LDL-C lowering efficacy studies in December 2016. The Company expects to report top-line results
from the global Phase 3 program in its entirety by mid-2018, and intends to use the Phase 3 program to
support the submission for an LDL-C lowering indication in the U.S. and Europe by the first half of
2019. The Company also initiated the CLEAR Outcomes CVOT in December 2016, and intends to use
positive results from this CVOT to support the submissions for a CV risk reduction indication in the
U.S. and Europe by 2022.
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 has not
commenced principal operations and is subject to risks and uncertainties which include the need to
research, develop, and clinically test potential therapeutic products; obtain regulatory approvals for its
products and commercialize them, if approved; expand its management and scientific staff; and finance
its operations with an ultimate goal of achieving profitable operations.
The Company has sustained operating losses since inception and expects such losses to continue
over the foreseeable future. Management plans to continue to fund operations through public or
private equity or debt financings or through other sources, which may include collaborations with third
parties. If adequate funds are not available, the Company may not be able to continue the development
of its current or future product candidates, or to commercialize its current or future product
candidates, if approved.
F-7
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
1. The Company and Basis of Presentation (Continued)
Follow On Offerings
On October 21, 2014, the Company completed an underwritten public offering of 4,887,500 shares
of common stock, including 637,500 shares sold pursuant to the full exercise of an over-allotment
option granted to the underwriters. All the shares were offered by the Company at a price to the public
of $20.00 per share. The aggregate net proceeds received by the Company from the offering were
$91.6 million, net of underwriting discounts and commissions and expenses payable by the Company.
On March 24, 2015, the Company completed an underwritten public offering of 2,012,500 shares of
common stock, including 262,500 shares sold pursuant to the full exercise of an over-allotment option
granted to the underwriters. All the shares were offered by the Company at a price to the public of
$100.00 per share. The aggregate net proceeds received by the Company from the offering were
$190.0 million, net of underwriting discounts and commissions and expenses payable by the Company.
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, expenses and related disclosures. Actual results could differ from
those estimates.
Cash and Cash Equivalents
The Company invests its excess cash in bank deposits, money market accounts, and short-term
investments. The Company considers 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.
Investments
Investments are considered 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. The Company has established guidelines for
investment of its excess cash and believes the guidelines maintain safety and liquidity through
diversification of counterparties and maturities.
F-8
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
2. Summary of Significant Accounting Policies (Continued)
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.
Fair Value of Financial Instruments
The Company’s cash, cash equivalents 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 and its eventual disposition are less than
its carrying amount. The impairment loss, if recognized, would be based on the excess of the carrying
value of the impaired asset over its respective fair value. No impairment losses have been recorded
through December 31, 2016.
Research and Development
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, research-related overhead expenses and fees paid to external service providers that conduct
certain research and development, clinical, and manufacturing activities on behalf of the Company.
Research and development costs are expensed as incurred.
Accrued Clinical Development Costs
Outside research costs are a component 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, the Company recognizes prepaid expenses or accrued expenses
related to these costs. These accrued or prepaid expenses are based on management’s estimates of the
work performed under service agreements, milestones achieved and experience with similar contracts.
The Company monitors each of these factors and adjusts estimates accordingly.
F-9
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
2. Summary of Significant Accounting Policies (Continued)
Income Taxes
The Company utilizes the liability method of accounting for income taxes as required by ASC 740,
Income Taxes. Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and the tax basis of assets and liabilities and are measured
using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The
Company has incurred operating losses since inception. Accordingly, it is not more likely than not that
the Company will realize deferred tax assets and as such, it has recorded a full valuation allowance.
Warrants
The Company accounts for its warrants issued in connection with its various financing transactions
based upon the characteristics and provisions of the instrument. Warrants classified as liabilities are
recorded on the Company’s balance sheet at their fair value on the date of issuance and are
marked-to-market on each subsequent reporting period, with the fair value changes recognized in the
statement of operations. Warrants classified as additional-paid-in-capital are recorded on the
Company’s balance sheet at their fair value on the date of issuance. The warrants are measured using
the Black-Scholes option-pricing model subsequent to the pricing of the Company’s IPO and a Monte
Carlo valuation model for previous periods which are based, in part, upon inputs where there is little
or no market data, requiring the Company to develop its own independent assumptions (see Note 4).
Stock-Based Compensation
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 calculated using a Black-Scholes option-pricing model. Additionally,
under the provisions of ASC 718, the Company is required to include an estimate of the number of
awards that will be forfeited in calculating compensation costs. Any changes to the estimated forfeiture
rates are accounted for prospectively. Stock-based compensation arrangements with non-employees are
recognized at the grant-date fair value and then re-measured at each reporting period. Expense is
recognized during the period the related services are rendered.
Recent Accounting Pronouncements
In August 2014, the Financial Accounting Standards Board (‘‘FASB’’) issued Accounting Standards
Update (‘‘ASU’’) 2014-15 which requires management of public companies to evaluate whether there
are conditions and events that raise substantial doubt about the entity’s ability to continue as a going
concern within one year after the financial statements are issued and, if so, to disclose that fact.
Management will be required to make this evaluation for both annual and interim reporting periods, if
applicable. Management is also required to evaluate and disclose whether its plans alleviate that doubt.
The standard is effective for annual periods ending after December 15, 2016, and interim periods
within annual periods beginning after December 15, 2016. The adoption of this standard did not have a
material impact on the financial position, results of operations or related financial statement
disclosures.
In February 2016, the FASB issued ASU 2016-02 which is intended to improve financial reporting
about leasing transactions. The updated guidance will require a lessee to recognize assets and liabilities
F-10
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
2. Summary of Significant Accounting Policies (Continued)
for leases with lease terms of more than twelve months. Consistent with current GAAP, the recognition,
measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will
depend on its classification as a capital or operating lease. Unlike current GAAP—which requires only
capital leases to be recognized on the balance sheet—the updated guidance will require both types of
leases to be recognized on the balance sheet. The standard is effective for public companies for fiscal
years beginning after December 15, 2018, and interim periods within those years. Early adoption is
permitted for annual or interim reporting periods for which the financial statements have not previously
been issued. The Company does not believe the adoption of this standard will have a material impact
on its financial position, results of operations or related financial statement disclosures.
In March 2016, the FASB issued ASU 2016-09 which includes provisions intended to simplify the
various aspects related to how share-based payments are accounted for and presented in the financial
statements. The updated guidance will include income tax consequences on the income statement and
the classification of the tax impact on the statement of cash flows. Additionally, under the updated
guidance companies will have to elect whether to account for forfeitures of share-based payments by
(1) recognizing forfeitures as they occur or (2) estimating the number of awards expected to be
forfeited and adjusting the estimate when it is likely to change, as is currently required. The standard is
effective for public business entities for fiscal years beginning after December 15, 2016, and interim
periods within those years. Early adoption is permitted for annual or interim reporting periods for
which the financial statements have not previously been issued. The Company does not believe the
adoption of this standard will have a material impact on its financial position, results of operations or
related financial statement disclosures.
3. Debt
Credit Facility
In June 2014, the Company entered into a loan and security agreement (the ‘‘Credit Facility’’) with
Oxford Finance LLC which provided for initial borrowings of $5.0 million under the term loan (the
‘‘Term A Loan’’) and additional borrowings of $15.0 million (the ‘‘Term B Loan’’) at the Company’s
option, for a maximum of $20.0 million. On June 30, 2014, the Company received proceeds of
$5.0 million from the issuance of secured promissory notes under the Term A Loan. Upon achieving
positive clinical development results in March 2015, the remaining $15.0 million under the Term B
Loan became available to be drawn down, at the Company’s sole discretion, until March 31, 2015. The
Company did not elect to draw down the Term B Loan as of March 31, 2015. The secured promissory
notes issued under the Credit Facility are due on July 1, 2018, and are collateralized by substantially all
of the Company’s personal property, other than its intellectual property.
The Company is obligated to make monthly, interest-only payments on the Term A Loan until
July 1, 2015, and, thereafter, to pay 36 consecutive, equal monthly installments of principal and interest
from August 1, 2015, through July 1, 2018. The Term A Loan bears interest at an annual rate of 6.40%.
In addition, a final payment equal to 8.0% of the Term A Loan is due upon the earlier of the maturity
date or prepayment of the term loan. The Company is recognizing the final payment as interest
expense using the effective interest method over the life of the Credit Facility.
There are no financial covenants associated to the Credit Facility. However, so long as the Credit
Facility is outstanding, there are negative covenants that limit or restrict the Company’s activities, which
include limitations on incurring indebtedness, granting liens, mergers or acquisitions, dispositions of
F-11
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
3. Debt (Continued)
assets, making certain investments, entering into certain transactions with affiliates, paying dividends or
distributions, encumbering or pledging interest in its intellectual property and certain other business
transactions. Additionally, the Credit Facility includes events of default, the occurrence and
continuation of any of which provides the lenders the right to exercise remedies against the Company
and the collateral securing the loans under the Credit Facility, which includes cash. These events of
default include, among other things, non-payment of any amounts due under the Credit Facility,
insolvency, the occurrence of a material adverse event, inaccuracy of representations and warranties,
cross default to material indebtedness and a material judgment against the Company. Upon the
occurrence of an event of default, all obligations under the Credit Facility shall accrue interest at a rate
equal to the fixed annual rate plus five percentage points.
In connection with the borrowing of the Term A Loan, the Company issued a warrant to purchase
8,230 shares of common stock at an exercise price of $15.19 (see Note 4). The warrant resulted in a
debt discount of $0.1 million which is amortized into interest expense using the effective interest
method over the life of the Term A Loan. In addition, the Company incurred debt issuance costs of
$0.1 million in connection with the borrowing of the Term A Loan. The debt issuance costs were
capitalized and included in long-term debt on the condensed balance sheet at the inception of the Term
A Loan, and are amortized to interest expense using the effective interest method over the same term.
As of December 31, 2016, the remaining unamortized discount and debt issuance costs associated with
the debt were less than $0.1 million and less than $0.1 million, respectively.
Estimated future principal payments due under the Credit Facility are as follows:
Years Ending December 31,
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(in thousands)
$1,709
1,049
$2,758
During the years ended December 31, 2016 and 2015, the Company recognized $0.4 million and
$0.5 million of interest expense and made cash interest payments of $0.2 million and $0.3 million
related to the Credit Facility, respectively.
4. Warrants
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 will terminate on
the earlier of June 30, 2019, and the closing of a merger or consolidation transaction in which the
Company is not the surviving entity. 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. The Company estimated the fair value of the warrant using a Black-Scholes option-pricing
model, which is based, in part, upon subjective assumptions including but not limited to stock price
volatility, the expected life of the warrant, the risk-free interest rate and the fair value of the common
stock underlying the warrant. The Company estimates the volatility of its stock based on public
company peer group historical volatility that is in line with the expected remaining life of the warrant.
The risk-free interest rate is based on the U.S. Treasury zero-coupon bond for a maturity similar to the
F-12
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
4. Warrants (Continued)
expected remaining life of the warrant. The expected remaining life of the warrant is assumed to be
equivalent to its remaining contractual term.
Upon the closing of the Company’s IPO, all warrants exercisable for 1,940,000 shares of Series A
preferred stock, at an exercise price of $1.00 per share (unadjusted for stock splits), were automatically
converted into warrants exercisable for 277,690 shares of common stock, at an exercise price of $6.99
per share. As a result, the Company concluded the warrants outstanding no longer met the criteria to
be classified as liabilities and were reclassified to additional paid-in capital at fair value on the date of
reclassification. During the year ended December 31, 2015, 29,330 warrants were net exercised for
25,445 shares of the Company’s common stock. The remaining 248,360 warrants outstanding as of
December 31, 2016, expire in February 2018.
As of December 31, 2016, the Company had warrants outstanding that were exercisable for a total
of 256,590 shares of common stock at a weighted-average exercise price of $7.25 per share.
5. Commitments and Contingencies
In February 2014, the Company entered into an operating lease agreement for its principal
executive offices located in Ann Arbor, Michigan commencing in April 2014, with a term of 63 months.
The Company’s lease provides for fixed monthly rent for the term of the lease, with monthly rent
increasing every 12 months subsequent to the first three months of the lease, and also provides for
certain rent adjustments to be paid as determined by the landlord.
In May 2014, the Company entered into the third amendment to the operating lease agreement for
its laboratory facility in Plymouth, Michigan. The amendment provides in part that (i) the expiration
date of the term of the lease is extended from April 2014 to April 2017, (ii) the rentable laboratory
space is adjusted to 3,045 square feet, (iii) the Company’s proportionate share of the landlord’s
expenses and taxes is adjusted to 7.40%, (iv) the Company may exercise its option to renew the lease
for one term of three years through written notice to the landlord by February 2017, and (v) the annual
base rent under the lease is decreased to $37,000, subject to increases and adjustments provided in the
lease. In December 2015, the Company entered into a termination agreement for its laboratory facility.
Pursuant to the termination, the Plymouth lease was terminated, effective retroactively on October 30,
2015 (the ‘‘Termination Date’’), rather than April 30, 2017, as contemplated by the Plymouth lease,
with the Company having no further rent obligations to the Landlord pursuant to the Plymouth lease
after the Termination Date.
In August 2015, the Company entered into an operating lease agreement to increase its office
space and support its clinical development operations located in Ann Arbor, Michigan, commencing
September 2015, with a term of 49 months. The Company’s lease provides for fixed monthly rent for
the term of the lease, with monthly rent increasing every 12 months subsequent to the first month of
the lease.
F-13
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
5. Commitments and Contingencies (Continued)
The total rent expense for the years ended December 31, 2016, 2015 and 2014, was approximately
$0.2 million, $0.2 million and $0.3 million, respectively. The following table summarizes the Company’s
future minimum lease payments as of December 31, 2016:
Operating lease . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . .
Total
$520
$520
Less than
1 Year
1 - 3 Years
3 - 5 Years
(in thousands)
More than
5 Years
$191
$191
$329
$329
$—
$—
$—
$—
Legal Proceedings
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. 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 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,
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.
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. 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. In light of, among other things, the early stage of the litigation, 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.
F-14
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
6. Property and Equipment
Property and equipment consist of the following:
Lab equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets in Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal
Less accumulated depreciation and amortization . . . . . . . . . . . . . .
December 31,
2016
2015
(in thousands)
$ 232
135
73
568
159
114
1,281
607
$ 232
130
73
568
159
—
1,162
355
Property and equipment, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 674
$ 807
Depreciation expense was $0.3 million, $0.2 million and $0.2 million for the years ended
December 31, 2016, 2015 and 2014, respectively.
7. Other Accrued Liabilities
Other accrued liabilities consist of the following:
December 31,
2016
2015
(in thousands)
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued franchise and property taxes . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest
Accrued other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 456
158
40
350
143
$ 571
140
37
250
125
Total other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,147
$1,123
F-15
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
8. Investments
The following table summarizes the Company’s cash equivalents and investments:
Amortized
Cost
December 31, 2016
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(in thousands)
Estimated
Fair Value
Cash equivalents:
Money market funds . . . . . . . . . . . . .
$ 33,661
$—
$ — $ 33,661
Short-term investments:
Certificates of deposit . . . . . . . . . . . .
U.S treasury notes . . . . . . . . . . . . . .
U.S. government agency securities . . .
25,586
47,547
100,356
Long-term investments:
Certificates of deposit . . . . . . . . . . . .
U.S. treasury notes . . . . . . . . . . . . . .
U.S. government agency securities . . .
3,432
22,575
5,000
1
2
13
—
—
—
(20)
(30)
(37)
(15)
(72)
(14)
25,567
47,519
100,332
3,417
22,503
4,986
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
$238,157
$16
$(188)
$237,985
Amortized
Cost
December 31, 2015
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(in thousands)
Estimated
Fair Value
Cash equivalents:
Money market funds . . . . . . . . . . . . .
$ 31,761
$—
$ — $ 31,761
Short-term investments:
Certificates of deposit . . . . . . . . . . . .
U.S. treasury notes . . . . . . . . . . . . . .
U.S. government agency securities . . .
19,774
12,620
102,683
Long-term investments:
Certificates of deposit . . . . . . . . . . . .
U.S. treasury notes . . . . . . . . . . . . . .
U.S. government agency securities . . .
12,299
22,553
45,793
—
—
—
—
—
—
(28)
(14)
(110)
(42)
(105)
(183)
19,746
12,606
102,573
12,257
22,448
45,610
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
$247,483
$—
$(482)
$247,001
At December 31, 2016, remaining contractual maturities of available-for-sale investments classified
as current on the balance sheet were less than 12 months, and remaining contractual maturities of
available-for-sale investments classified as long-term were less than two years.
During the years ended December 31, 2016, 2015 and 2014, other income, net in the statements of
operations includes interest income on available-for-sale investments of $2.6 million, $1.5 million and
$0.4 million, and expense for the amortization of premiums and discounts on investments of
$1.0 million, $0.6 million and $0.2 million, respectively.
F-16
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
8. Investments (Continued)
There were no unrealized gains or losses on investments reclassified from accumulated other
comprehensive loss to other income, net in the statements of operations during the year ended
December 31, 2016.
9. 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
December 31, 2016
Assets:
Total
Level 1
Level 2
Level 3
(in thousands)
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities:
$ 33,661
$ 33,661
$
— $—
Certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. treasury notes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. government agency securities . . . . . . . . . . . . . . . . .
28,984
70,022
105,318
28,984
70,022
—
—
— 105,318
—
—
—
Total assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .
$237,985
$132,667
$105,318
$—
Description
December 31, 2015
Assets:
Total
Level 1
Level 2
Level 3
(in thousands)
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities:
Certificates of deposit
. . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. treasury notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
U.S. government agency securities
$ 31,761
$31,761
$
— $—
32,003
35,054
148,183
32,003
35,054
—
—
— 148,183
—
—
—
Total assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$247,001
$98,818
$148,183
$—
F-17
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
9. Fair Value Measurements (Continued)
There were no transfers between Levels 1, 2 or 3 during the years ended December 31, 2016 or
December 31, 2015.
Fair Value Measurements on a Nonrecurring Basis
In addition to items that are measured at fair value on a recurring basis, the Company also
measures assets held for sale at the lower of its carrying amount or fair value on a nonrecurring basis.
The Company did not recognize impairment expense and other losses relating to assets held for sale
during the years ended December 31, 2016, 2015, and 2014. There are no assets held for sale as of
December 31, 2016.
10. Stock Compensation
2013 Stock Option and Incentive Plan
In May 2015, the Company’s stockholders approved the amended and restated 2013 Stock Option
and Incentive Plan (as amended, the ‘‘2013 Plan’’) which, among other things, increased the number of
shares of common stock reserved for issuance thereunder. The number of shares of common stock
available for awards under the 2013 Plan was increased by 923,622 shares from 2,051,378 shares 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, 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 2013 Plan provides for the granting of stock options, stock appreciation rights, restricted stock
awards, restricted stock units (‘‘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, taking into account estimated
forfeitures.
2008 Stock Option and Restricted Stock Plan
In April 2008, the Company adopted the 2008 Plan, administered by the Board of Directors or a
committee appointed by the Board of Directors. The 2008 Plan provides for the granting of stock
options and restricted stock to employees and nonemployees of the Company. Options granted under
the 2008 Plan may either be incentive stock options, restricted stock awards or nonqualified stock
F-18
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
10. Stock Compensation (Continued)
options. Stock options and restricted stock grants may be granted to employees, directors and
consultants.
Stock awards under the 2008 Plan may be granted for up to ten years from the adoption of the
2008 Plan at prices no less than 100 percent of the fair value of the shares on the date of the grant as
determined by (i) the closing price of the Company’s common stock on any national exchange, (ii) the
National Association of Securities Dealers Inc. Automated Quotation System (‘‘NASDAQ’’), if so
authorized for quotation as a NASDAQ security, or (iii) by reasonable application of a reasonable
valuation method. The valuation methods utilized by the Company are consistent with the AICPA
Technical Practice Aid.
Under the 2013 Plan and the 2008 Plan the vesting of options granted or restricted awards given
will be determined individually with each option grant. Generally, 25 percent of the granted amount
will vest upon the first anniversary of the option grant with the remainder vesting ratably on the first
day of each calendar quarter for the following three years. Stock options have a 10-year life and expire
if not exercised within that period, or if not exercised within 90 days of cessation of providing service to
the Company.
The following table summarizes the activity relating to the Company’s options to purchase common
stock for the year ended December 31, 2016:
Weighted-Average Weighted-Average
Exercise
Price
Per Share
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value
(in thousands)
$16,433
8.36
Outstanding at December 31, 2015 . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired (vested and
Number of
Options
2,662,862
786,250
unvested) . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . .
(165,368)
(27,757)
Outstanding at December 31, 2016 . . . . . . .
3,255,987
$32.42
$15.31
$32.86
$ 1.61
$28.53
7.73
$ 5,214
The following table summarizes information about the Company’s stock option plan as of
December 31, 2016:
Number of
Options
Weighted-Average Weighted-Average
Exercise
Price
Per Share
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value
(in thousands)
Vested and expected to vest at
December 31, 2016 . . . . . . . . . . . . . . . .
3,161,251
Exercisable at December 31, 2016 . . . . . . .
1,692,914
$28.46
$25.70
7.70
6.88
$5,171
$4,579
The total intrinsic value of stock options exercised during the years ended December 31, 2016,
2015 and 2014, was $0.4 million, $7.4 million, and $1.4 million, respectively.
F-19
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
10. Stock Compensation (Continued)
The following table shows the weighted-average assumptions used to compute the stock-based
compensation costs for the stock options granted to employees and non-employees during the period
from December 31, 2016, to December 31, 2014, using the Black-Scholes option-pricing model:
Year ended
December 31,
2016
2015
2014
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Weighted-average expected life of options (years) . . . . . . . . . .
6.22
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.47% 1.65% 1.81%
—
6.11
—
6.32
71% 70% 75%
The risk-free interest rate assumption was based on the United States Treasury’s rates for U.S.
Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being
valued. The assumed dividend yield was based on the Company’s expectation of not paying dividends in
the foreseeable future. The weighted-average expected life of the options was calculated using the
simplified method as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin
No. 107 (‘‘SAB No. 107’’). This decision was based on the lack of relevant historical data due to the
Company’s limited historical experience. In addition, due to the Company’s limited historical data, the
estimated volatility also reflects the application of SAB No. 107, incorporating the historical volatility of
comparable companies whose share prices are publicly available.
The weighted-average grant-date fair values of stock options granted during the years ended
December 31, 2016, 2015 and 2014, were $9.78, $38.44 and $10.15, respectively. During the years ended
December 31, 2016, 2015 and 2014, the Company recognized stock-based compensation expense related
to stock options of $15.6 million, $12.6 million and $3.7 million, respectively.
As of December 31, 2016, there was approximately $27.3 million of unrecognized compensation
cost related to unvested options, adjusted for forfeitures, which will be recognized over a weighted-
average period of approximately 2.4 years.
The following table summarizes the activity relating to the Company’s RSUs for the year ended
December 31, 2016:
Outstanding and unvested at December 31, 2015 . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of
RSUs
25,000
3,000
(3,000)
(8,749)
Outstanding and unvested at December 31, 2016 . . . . . .
16,251
Weighted-Average
Fair Value
Per Share
$57.54
$15.97
$15.97
$57.54
$57.54
During the years ended December 31, 2016, 2015 and 2014, the Company recognized
approximately $0.4 million, $0.1 million and $0, respectively, of stock-based compensation expense
recognized related to RSUs. As of December 31, 2016, there was approximately $0.8 million of
F-20
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
10. Stock Compensation (Continued)
unrecognized stock-based compensation expense related to unvested RSUs, adjusted for forfeitures,
which will be recognized over a weighted-average period of approximately 2.5 years.
11. Employee Benefit Plan
During 2008, the Company adopted the Esperion Therapeutics, Inc. 401(k) Plan (the ‘‘401(k)
Plan’’), which qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue
Code. Under the 401(k) Plan, participating employees may defer a portion of their pretax earnings.
The Company may, at its sole discretion, contribute for the benefit of eligible employees. Company
contributions to the 401(k) Plan during the years ended December 31, 2016, 2015 and 2014, were
$0.2 million, $0.1 million, and $0, respectively.
12. Income Taxes
There was no provision for income taxes for the years ended December 31, 2016, 2015 and 2014,
because the Company has incurred operating losses since inception. At December 31, 2016, the
Company concluded 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.
As of December 31, 2016, 2015 and 2014, the Company had deferred tax assets, before valuation
allowance, of approximately $75.3 million, $50.6 million and $34.2 million, respectively. Realization of
the deferred assets is dependent upon future taxable income, if any, the amount and timing of which
are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance.
As of December 31, 2016, 2015 and 2014, the Company had federal net operating loss (‘‘NOL’’)
carryforwards of approximately $196.4 million, $137.4 million and $95.1 million, respectively. The
federal NOL carryforwards will expire at various dates beginning in 2028, if not utilized. As of
December 31, 2016, 2015 and 2014, the Company had state NOL carryforwards of approximately
$18.1 million, $15.4 million and $16.6 million, respectively. The state NOL carryforwards will expire at
various dates beginning in 2022, if not utilized. The Company has $4.5 million of NOLs related to
excess tax benefits generated upon the settlement of stock awards that increased NOL. The Company
cannot record the benefit of these losses in the financial statements until the losses are utilized to
reduce its income taxes payable at which time it will recognize the tax benefit in equity.
A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as
follows:
December 31,
2016
2015
2014
Federal income tax (benefit) at statutory rate . . . . . . . . . . .
Change in tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . .
(34.0)% (34.0)% (34.0)%
0.1% 0.3% 2.1%
0.9% 1.3% 1.0%
0.2% 0.0% 0.1%
32.8% 32.4% 30.8%
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . .
0.0% 0.0% 0.0%
F-21
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
12. Income Taxes (Continued)
If the Company experiences a greater than 50 percentage point aggregate change in ownership of
certain significant stockholders over a three-year period, a Section 382 ownership change could be
deemed to have occurred. If a section 382 change occurs, the Company’s future utilization of the net
operating loss carryforwards and credits as of the ownership change will be subject to an annual
limitation under Section 382 of the Internal Revenue Code of 1986, as amended, and similar state
provisions. Such an annual limitation may result in the expiration of net operating losses before
utilization.
The Company’s reserves related to taxes are based on a determination of whether and how much
of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be
realized following resolution of any potential contingencies present related to the tax benefit. The
Company recognized no material adjustment for unrecognized income tax benefits. Through
December 31, 2016, the Company had no unrecognized tax benefits or related interest and penalties
accrued.
Significant components of the Company’s deferred tax assets are summarized in the table below:
December 31,
2016
2015
(in thousands)
Deferred tax assets:
Federal and state operating loss carryforwards . . . . . . . . . . .
Equity compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 65,972
9,067
226
$ 45,848
4,387
341
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75,265
(75,265)
50,576
(50,576)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
— $
—
13. Net Loss Per Common Share
Basic net loss per share is calculated by dividing net loss by the weighted-average number of
common shares outstanding during the period, without consideration for common stock equivalents.
Diluted net loss per share is computed by dividing net loss by the weighted-average number of common
stock equivalents outstanding for the period determined using the treasury-stock method. For purposes
of this calculation, warrants for common stock, stock options and unvested restricted stock and 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.
F-22
Esperion Therapeutics, Inc.
Notes to the Financial Statements (Continued)
13. Net Loss Per Common Share (Continued)
The shares outstanding at the end of the respective periods presented below were excluded from
the calculation of diluted net loss per share due to their anti-dilutive effect:
December 31,
2016
2015
2014
Warrants for common stock . . . . . . . . . . . . . . . .
Common shares under option . . . . . . . . . . . . . . .
Unvested restricted stock and RSUs . . . . . . . . . .
256,590
3,255,987
16,251
256,590
2,662,862
27,399
285,920
1,729,586
9,551
Total potential dilutive shares . . . . . . . . . . . . . . .
3,528,828
2,946,851
2,025,057
14. Selected Quarterly Financial Data (Unaudited)
The following table summarizes the unaudited quarterly financial data for the last two years:
2016
March 31
June 30
September 30
December 31
(in thousands, except share and per share data)
Operating expenses:
Research and development . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . .
$
$
9,791
5,031
$
9,698
4,633
13,498
4,214
$
Total operating expenses . . . . . . . . . . . . . . . . .
Loss from operations:
. . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Other income, net
Net loss . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss per common share (basic and diluted)
Weighted-average shares outstanding (basic
$
$
14,822
(14,822)
(110)
347
14,331
(14,331)
(99)
395
17,712
(17,712)
(89)
399
(14,585) $
(14,035) $
(17,402) $
(28,956)
(0.65) $
(0.62) $
(0.77) $
(1.29)
and diluted) . . . . . . . . . . . . . . . . . . . . . . . .
22,532,031
22,541,455
22,550,438
22,554,418
2015
March 31
June 30
September 30
December 31
(in thousands, except share and per share data)
Operating expenses:
Research and development . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . .
$
$
7,390
4,035
$
7,209
5,253
$
7,247
5,672
Total operating expenses . . . . . . . . . . . . . . . . .
Loss from operations:
. . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Other income, net
Net loss . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss per common share (basic and diluted)
Weighted-average shares outstanding (basic
$
$
11,425
(11,425)
(134)
93
12,462
(12,462)
(135)
202
12,919
(12,919)
(130)
248
(11,466) $
(12,395) $
(12,801) $
(13,122)
(0.56) $
(0.55) $
(0.57) $
(0.58)
and diluted) . . . . . . . . . . . . . . . . . . . . . . . .
20,589,293
22,465,175
22,494,075
22,515,136
F-23
24,881
4,404
29,285
(29,285)
(78)
407
7,956
5,278
13,234
(13,234)
(121)
233
Exhibit No.
Exhibit List
Exhibit Index
3.1
3.2
4.1
4.2
4.3
4.4
4.5
Amended and Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant’s Amendment No. 2 to the Registration
Statement on Form S-1, File No. 333-188595, filed on June 12, 2013)
Amended and Restated By-laws of the Registrant (incorporated by reference to
Exhibit 3.4 to the Registrant’s Amendment No. 1 to the Registration Statement on
Form S-1, File No. 333-188595, filed on June 7, 2013)
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the
Registrant’s Amendment No. 2 to the Registration Statement on Form S-1, File
No. 333-188595, filed on June 12, 2013)
Form of Warrant to Purchase Preferred Stock dated September 4, 2012 (incorporated by
reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-1, File
No. 333-188595, filed on May 14, 2013)
Investor Rights Agreement by and between the Registrant and certain of its stockholders
dated April 28, 2008 (incorporated by reference to Exhibit 4.4 to the Registrant’s
Registration Statement on Form S-1, File No. 333-188595, filed on May 14, 2013)
Amendment No. 1 to Investor Rights Agreement by and between the Registrant and
certain of its stockholders dated April 11, 2013 (incorporated by reference to Exhibit 4.5
to the Registrant’s Registration Statement on Form S-1, File No. 333-188595, filed on
May 14, 2013)
Warrant dated June 30, 2014 issued to Oxford Finance LLC (incorporated by reference to
Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, File No. 001-35986, filed on
July 2, 2014)
10.1*
License Agreement between Pfizer Inc. and the Registrant dated April 28, 2008 and
amended on November 17, 2010 (incorporated by reference to Exhibit 10.7 to the
Registrant’s Registration Statement on Form S-1, File No. 333-188595, filed on May 14,
2013)
10.2
10.3
10.4
10.5
Termination Agreement, dated December 2, 2015, by and between the Registrant and
Michigan Land Bank Fast Track Authority (incorporated by reference to Exhibit 10.1 to
the Registrant’s Current Report on Form 8-K, File No. 001-35986, filed on December 3,
2015)
Valley Ranch Business Park Lease by and between the Registrant and McMullen
SPE, LLC, dated February 4, 2014 (incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K, File No. 001-35986, filed on February 7, 2014)
Form of Officer Indemnification Agreement entered into between the Registrant and its
officers (incorporated by reference to Exhibit 10.8 to the Registrant’s Registration
Statement on Form S-1, File No. 333-188595, filed on May 14, 2013)
Form of Director Indemnification Agreement entered into between the Registrant and its
directors (incorporated by reference to Exhibit 10.9 to the Registrant’s Registration
Statement on Form S-1, File No. 333-188595, filed on May 14, 2013)
10.6# 2008 Incentive Stock Option and Restricted Stock Plan and forms of agreements
thereunder (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration
Statement on Form S-1, File No. 333-188595, filed on May 14, 2013)
Exhibit No.
Exhibit Index
10.7# Amended and Restated 2013 Stock Option and Incentive Plan and forms of agreements
thereunder (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly
Report on Form 10-Q, File No. 001-35986, filed on November 3, 2016).
10.8# Senior Executive Cash Bonus Plan (incorporated by reference to Exhibit 10.11 to the
Registrant’s Amendment No. 1 to the Registration Statement on Form S-1, File
No. 333-188595, filed on June 7, 2013)
10.9# Employment Agreement by and between the Registrant and Dr. Roger S. Newton dated
December 4, 2012 (incorporated by reference to Exhibit 10.3 to the Registrant’s
Registration Statement on Form S-1, File No. 333-188595, filed on May 14, 2013)
10.11
Loan and Security Agreement, dated June 30, 2014, by and between the Registrant and
Oxford Finance LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K, File No. 001- 35986, filed on July 2, 2014).
10.12# Employment Agreement, dated May 14, 2015, between the Registrant and Tim M.
Mayleben (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report
on Form 8-K, File No. 001- 35986, filed on May 20, 2015).
10.13# Employment Agreement, dated May 14, 2015, between the Registrant and Narendra D.
Lalwani (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report
on Form 10-Q, File No. 001- 35986, filed on August 6, 2015).
10.14# Employment Agreement, effective June 15, 2015, between the Registrant and Mary P.
McGowan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report
on Form 8-K, File No. 001-35986, filed on June 15, 2015).
10.14# Advisor Agreement, dated December 8, 2016, between the Company and Roger Newton,
Ph.D. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on
Form 8-K, File No. 001-35986, filed on December 9, 2016).
21.1
Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the
Registrant’s Registration Statement on Form S-1, File No. 333-188595, filed on May 14,
2013)
23.1** Consent of Ernst & Young LLP
31.1** Certification of Principal Executive Officer and 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.INS** XBRL Instance Document.
101.SCH** XBRL Taxonomy Extension Schema Document
101.CAL** XBRL Taxonomy Extension Calculation Document
101.DEF** XBRL Taxonomy Extension Definition Linkbase Document
101.LAB** XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE** XBRL Taxonomy Extension Presentation Link Document.
(#)
(*)
Management contract or compensatory plan or arrangement.
Confidential treatment has been granted by the Securities and Exchange Commission as to
certain portions.
(**)
Filed herewith.
(***)
The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual
Report on Form 10-K and will not be deemed ‘‘filed’’ for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be
incorporated by reference into any filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the Registrant
specifically incorporates it by reference.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
• Registration Statement (Form S-3 No. 333-208701) of Esperion Therapeutics, Inc.
• Registration Statement (Form S-8 No. 333-208702) pertaining to the Amended and Restated
2013 Stock Option and Incentive Plan of Esperion Therapeutics, Inc.
• Registration Statement (Form S-8 No. 333-206180) pertaining to the Amended and Restated
2013 Stock Option and Incentive Plan of Esperion Therapeutics, Inc.
• Registration Statement (Form S-8 No. 333-201378) pertaining to the 2013 Stock Option and
Incentive Plan of Esperion Therapeutics, Inc.
• Registration Statement (Form S-8 No. 333-194536) pertaining to the 2013 Stock Option and
Incentive Plan of Esperion Therapeutics, Inc.
• Registration Statement (Form S-8 No. 333-189738) pertaining to the 2008 Incentive Stock
Option and Restricted Stock Plan and the 2013 Stock Option and Incentive Plan of Esperion
Therapeutics, Inc.
of our reports dated February 22, 2017, with respect to the financial statements of Esperion
Therapeutics, Inc. and the effectiveness of internal control over financial reporting of Esperion
Therapeutics, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2016.
/s/ Ernst & Young LLP
Detroit, Michigan
February 22, 2017
Exhibit 31.1
I, Tim M. Mayleben, certify that:
CERTIFICATIONS UNDER SECTION 302
1.
I have reviewed this annual report on Form 10-K of Esperion Therapeutics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.
Date: February 22, 2017
/s/ TIM M. MAYLEBEN
Tim M. Mayleben
President and Chief Executive Officer
(Principal Executive Officer and Principal Financial
Officer)
Exhibit 32.1
CERTIFICATIONS UNDER SECTION 906
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of
section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Esperion
Therapeutics, Inc., a Delaware corporation (the ‘‘Company’’), does hereby certify, to such officer’s
knowledge, that:
The Annual Report for the year ended December 31, 2016 (the ‘‘Form 10-K’’) of the Company
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
and the information contained in the Form 10-K fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: February 22, 2017
/s/ TIM M. MAYLEBEN
Tim M. Mayleben
President and Chief Executive Officer
(Principal Executive Officer and Principal Financial
Officer)
[This page intentionally left blank]
The Lipid Management Team
Left to right
RICK BARTRAM
Vice President, Finance
ASHLEY HALL
^(cid:4)(cid:3)(cid:10)(cid:6)(cid:26)’(cid:10)(cid:20)(cid:4)(cid:5)(cid:10)(cid:7)(cid:8)(cid:29)(cid:6)_(cid:14)(cid:11)(cid:13)(cid:2)(cid:14)(cid:6)‘(cid:10)(cid:23)(cid:12)(cid:14)(cid:2)(cid:8)(cid:11)’(cid:28)(cid:6)@(cid:24)(cid:2)(cid:4)’(cid:20)(cid:6)
MARIANNE ANDREACH
Senior Vice President, Product Planning
TIM MAYLEBEN
(cid:26)’(cid:10)(cid:20)(cid:4)(cid:5)(cid:10)(cid:7)(cid:8)(cid:6)(cid:2)(cid:7)(cid:5)(cid:6)"(cid:9)(cid:4)(cid:10)(cid:25)(cid:6)(cid:31)(cid:19)(cid:10)(cid:3)(cid:12)(cid:8)(cid:4)=(cid:10)(cid:6)[>(cid:3)(cid:10)’(cid:6)
MARY McGOWAN, MD
"(cid:9)(cid:4)(cid:10)(cid:25)(cid:6)](cid:10)(cid:5)(cid:4)(cid:3)(cid:2)(cid:14)(cid:6)[>(cid:3)(cid:10)’
NARENDRA LALWANI, PHD, MBA
Executive Vice President, Research and
<(cid:10)=(cid:10)(cid:14)(cid:11)(cid:16)(cid:21)(cid:10)(cid:7)(cid:8)(cid:29)(cid:6)(cid:2)(cid:7)(cid:5)(cid:6)"(cid:9)(cid:4)(cid:10)(cid:25)(cid:6)[(cid:16)(cid:10)’(cid:2)(cid:8)(cid:4)(cid:7)(cid:23)(cid:6)[>(cid:3)(cid:10)’
Esperion Board of Directors
TIM MAYLEBEN
(cid:26)’(cid:10)(cid:20)(cid:4)(cid:5)(cid:10)(cid:7)(cid:8)(cid:6)(cid:2)(cid:7)(cid:5)(cid:6)"(cid:9)(cid:4)(cid:10)(cid:25)(cid:6)(cid:31)(cid:19)(cid:10)(cid:3)(cid:12)(cid:8)(cid:4)=(cid:10)(cid:6)[>(cid:3)(cid:10)’(cid:29)(cid:6)(cid:31)(cid:20)(cid:16)(cid:10)’(cid:4)(cid:11)(cid:7)(cid:6)
DAN JANNEY
Managing Director, Alta Partners
ROGER NEWTON, PHD, FAHA, FACN
&(cid:3)(cid:4)(cid:10)(cid:7)(cid:8)(cid:4)(cid:18)(cid:3)(cid:6)@(cid:5)=(cid:4)(cid:20)(cid:11)’(cid:29)(cid:6)(cid:31)(cid:20)(cid:16)(cid:10)’(cid:4)(cid:11)(cid:7)(cid:6)
SCOTT BRAUNSTEIN, MD
Operating Partner, Aisling Capital and
Senior Vice President, Strategy
& Corporate Development,
Pacira Pharmaceuticals
MARK McGOVERN, MD, FACC, FACP
{(cid:11)’(cid:21)(cid:10)’(cid:6)(cid:31)(cid:19)(cid:10)(cid:3)(cid:12)(cid:8)(cid:4)=(cid:10)(cid:6)^(cid:4)(cid:3)(cid:10)(cid:6)(cid:26)’(cid:10)(cid:20)(cid:4)(cid:5)(cid:10)(cid:7)(cid:8)(cid:29)(cid:6)](cid:10)(cid:5)(cid:4)(cid:3)(cid:2)(cid:14)(cid:6)@(cid:24)(cid:2)(cid:4)’(cid:20)(cid:6)
(cid:2)(cid:7)(cid:5)(cid:6)"(cid:9)(cid:4)(cid:10)(cid:25)(cid:6)](cid:10)(cid:5)(cid:4)(cid:3)(cid:2)(cid:14)(cid:6)[>(cid:3)(cid:10)’(cid:29)(cid:6)(cid:27)(cid:11)(cid:20)(cid:6)(cid:26)(cid:9)(cid:2)’(cid:21)(cid:2)(cid:3)(cid:10)(cid:12)(cid:8)(cid:4)(cid:3)(cid:2)(cid:14)(cid:20)(cid:6)
GILBERT OMENN, MD, PHD
Professor of Computational Medicine and
Bioinformatics, Internal Medicine, Human Genetics
and Public Health, University of Michigan
DOV GOLDSTEIN, MD
Managing Partner, Aisling Capital
NICOLE VITULLO
Partner, Domain Associates, LLC
ANTONIO GOTTO, JR., MD, DPHIL
<(cid:10)(cid:2)(cid:7)(cid:6)(cid:31)(cid:21)(cid:10)’(cid:4)(cid:8)(cid:12)(cid:20)(cid:6)(cid:2)(cid:7)(cid:5)(cid:6)(cid:26)’(cid:11)=(cid:11)(cid:20)(cid:8)(cid:6)(cid:25)(cid:11)’(cid:6)](cid:10)(cid:5)(cid:4)(cid:3)(cid:2)(cid:14)(cid:6)@(cid:24)(cid:2)(cid:4)’(cid:20)(cid:6)
Emeritus of Cornell University
General shareholder inquiries, including requests for
the Company’s Annual Report on Form 10-K, should be directed to:
INVESTOR
RELATIONS
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
GENERAL
COUNSEL
Esperion Therapeutics, Inc.
3891 Ranchero Dr, Ste 150
Ann Arbor, MI 48108
Phone: (734) 887-3903
investorrelations@esperion.com
investors.esperion.com
Ernst & Young
777 Woodward Ave
Detroit, MI 48226
Phone: (313) 628-7100
Goodwin Procter LLP
100 Northern Ave
Boston, MA 02210
Phone: (617) 570-1000
REGISTRAR AND
TRANSFER AGENT
Computershare
250 Royall St
Canton, MA 02021
Phone: (312) 360-5195
3891 R anche ro Drive, Suite 15 0
Ann Arbor, MI 48108
w w w.esperion.com