Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 01, 2020 | |
Document and Entity Information | ||
Entity Registrant Name | Esperion Therapeutics, Inc. | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-35986 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-1870780 | |
Entity Address, Address Line One | 3891 Ranchero Drive, Suite 150 | |
Entity Address, City or Town | Ann Arbor | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48108 | |
City Area Code | 734 | |
Local Phone Number | 887-3903 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | ESPR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,617,431 | |
Entity Central Index Key | 0001434868 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 149,386 | $ 166,130 |
Restricted cash | 928 | 928 |
Short-term investments | 7,931 | 34,651 |
Prepaid clinical development costs | 1,189 | 6,081 |
Inventories | 1,841 | |
Other prepaid and current assets | 11,354 | 3,924 |
Total current assets | 172,629 | 211,714 |
Property and equipment, net | 1,447 | 1,145 |
Intangible assets | 56 | 56 |
Right of use operating lease assets | 5,510 | 1,532 |
Total assets | 179,642 | 214,447 |
Current liabilities: | ||
Accounts payable | 15,114 | 28,856 |
Accrued clinical development costs | 22,687 | 17,511 |
Other accrued liabilities | 23,570 | 11,871 |
Revenue interest liability | 8,999 | 5,236 |
Deferred revenue from collaborations | 1,170 | 2,152 |
Operating lease liabilities | 1,913 | 454 |
Total current liabilities | 73,453 | 66,080 |
Revenue interest liability | 152,716 | 127,308 |
Operating lease liabilities | 3,719 | 1,109 |
Total liabilities | 229,888 | 194,497 |
Commitments and contingencies (Note 5) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized and no shares issued or outstanding as of March 31, 2020 and December 31, 2019 | ||
Common stock, $0.001 par value; 120,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 27,548,133 shares issued and outstanding at March 31, 2020 and 27,497,911 shares issued and outstanding at December 31, 2019 | 28 | 27 |
Additional paid-in capital | 723,232 | 715,166 |
Accumulated other comprehensive income | 9 | 23 |
Accumulated deficit | (773,515) | (695,266) |
Total stockholders' equity (deficit) | (50,246) | 19,950 |
Total liabilities and stockholders' equity | $ 179,642 | $ 214,447 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Condensed Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 27,548,133 | 27,497,911 |
Common stock, shares outstanding | 27,548,133 | 27,497,911 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Total Revenues | $ 1,840 | $ 145,419 |
Operating expenses: | ||
Cost of goods sold | 31 | |
Research and development | 34,702 | 46,308 |
Selling, general and administrative | 41,553 | 12,182 |
Total operating expenses | 76,286 | 58,490 |
Income (loss) from operations | (74,446) | 86,929 |
Interest expense | (4,171) | |
Other income, net | 368 | 450 |
Net income (loss) | $ (78,249) | $ 87,379 |
Net income (loss) per common share - basic | $ (2.84) | $ 3.26 |
Net income (loss) per common share - diluted | $ (2.84) | $ 3.07 |
Weighted-average shares outstanding - basic | 27,519,229 | 26,842,785 |
Weighted-average shares outstanding - diluted | 27,519,229 | 28,449,767 |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on investments | $ (14) | $ 208 |
Comprehensive income (loss) | (78,263) | 87,587 |
Product sales, net | ||
Revenues: | ||
Total Revenues | 858 | |
Collaboration revenue | ||
Revenues: | ||
Total Revenues | $ 982 | $ 145,419 |
Condensed Statements of Stockho
Condensed Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2018 | $ 27 | $ 677,511 | $ (598,101) | $ (319) | $ 79,118 |
Balance (in shares) at Dec. 31, 2018 | 26,824,859 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options | 1,669 | 1,669 | |||
Exercise of stock options (in shares) | 80,218 | ||||
Vesting of restricted stock units (in shares) | 3,125 | ||||
Stock-based compensation | 6,636 | 6,636 | |||
Other comprehensive gain (loss) | 208 | 208 | |||
Net income (loss) | 87,379 | 87,379 | |||
Balance at Mar. 31, 2019 | $ 27 | 685,816 | (510,722) | (111) | 175,010 |
Balance (in shares) at Mar. 31, 2019 | 26,908,202 | ||||
Balance at Dec. 31, 2019 | $ 27 | 715,166 | (695,266) | 23 | $ 19,950 |
Balance (in shares) at Dec. 31, 2019 | 27,497,911 | 27,497,911 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options | $ 1 | 1,013 | $ 1,014 | ||
Exercise of stock options (in shares) | 40,133 | 40,133 | |||
Vesting of restricted stock units (in shares) | 10,089 | ||||
Stock-based compensation | 7,053 | $ 7,053 | |||
Other comprehensive gain (loss) | (14) | (14) | |||
Net income (loss) | (78,249) | (78,249) | |||
Balance at Mar. 31, 2020 | $ 28 | $ 723,232 | $ (773,515) | $ 9 | $ (50,246) |
Balance (in shares) at Mar. 31, 2020 | 27,548,133 | 27,548,133 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating activities | ||
Net income (loss) | $ (78,249) | $ 87,379 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation expense | 106 | 71 |
Accretion of premiums and discounts on investments | (73) | (75) |
Non-cash interest expense related to the revenue interest liability | 4,171 | |
Stock-based compensation expense | 7,053 | 6,636 |
Changes in assets and liabilities: | ||
Prepaids and other assets | (2,538) | 1,294 |
Deferred revenue | (982) | 4,581 |
Inventories | (1,841) | |
Accounts payable | (13,650) | (11,549) |
Other accrued liabilities | 16,656 | 3,354 |
Net cash (used in) provided by operating activities | (69,347) | 91,691 |
Investing activities | ||
Purchases of investments | (4,420) | |
Proceeds from sales/maturities of investments | 31,200 | 45,885 |
Purchase of property and equipment | (191) | (189) |
Net cash provided by investing activities | 26,589 | 45,696 |
Financing activities | ||
Proceeds from revenue interest liability | 25,000 | |
Proceeds from exercise of common stock options | 1,014 | 1,669 |
Net cash provided by financing activities | 26,014 | 1,669 |
Net increase (decrease) in cash and cash equivalents | (16,744) | 139,056 |
Cash, cash equivalents and restricted cash at beginning of period | 167,058 | 36,973 |
Cash, cash equivalents and restricted cash at end of period | 150,314 | 176,029 |
Supplemental disclosure of cash flow information: | ||
Purchase of property and equipment not yet paid | 408 | |
Non cash right of use asset | $ 91 | $ 25 |
The Company and Basis of Presen
The Company and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
The Company and Basis of Presentation | |
The Company and Basis of Presentation | 1. The Company and Basis of Presentation The Company is the Lipid Management Company, a pharmaceutical company focused on developing and commercializing affordable, oral, once-daily, non-statin medicines for the treatment of patients with elevated low density lipoprotein cholesterol ("LDL-C"). Through scientific and clinical excellence, and a deep understanding of cholesterol biology, the experienced Lipid Management Team at Esperion is committed to developing new LDL-C lowering medicines that will make a substantial impact on reducing global cardiovascular disease ("CVD"); the leading cause of death around the world. NEXLETOL TM TM On February 21, 2020, the Company announced that the U.S. Food and Drug Administration (“FDA”) approved NEXLETOL an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with HeFH or established ASCVD who require additional lowering of LDL-C. The effect of NEXLETOL on cardiovascular morbidity and mortality has not been determined. NEXLETOL is the first oral, once-daily, non-statin LDL-C lowering medicine approved since 2002 for indicated patients. On February 26, 2020, the Company announced that the FDA approved NEXLIZET as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with HeFH or established ASCVD who require additional lowering of LDL-C. The effect of NEXLIZET on cardiovascular morbidity and mortality has not been determined. NEXLIZET is the first non-statin, LDL-C lowering fixed combination drug product ever approved. On January 31, 2020, the Committee for Medicinal Products for Human Use ("CHMP") of the European Medicines Agency ("EMA") adopted a positive opinion for the Marketing Authorisation Applications ("MAAs") of both bempedoic acid and the bempedoic acid / ezetimibe combination tablets, recommending approval for the treatment of hypercholesterolemia and mixed dyslipidemia. On April 6, 2020, the Company announced that the European Commission (“EC”) approved the NILEMDO™ (bempedoic acid) and NUSTENDI™ (bempedoic acid and ezetimibe) tablets for the treatment of hypercholesterolemia and mixed dyslipidemia. The decision is applicable to all 27 European Union member states plus the United Kingdom, Iceland, Norway and Liechtenstein. NILEMDO (bempedoic acid) and NUSTENDI (bempedoic acid and ezetimibe) are the branded products names for bempedoic acid and the bempedoic acid / ezetimibe combination tablets in Europe. NILEMDO is the first, oral, non-statin, LDL-C lowering medicines approved in Europe in almost two decades for indicated patients, and NUSTENDI is the first non-statin, LDL-C lowering combination medicine ever approved in Europe. On April 17, 2020, the Company entered into a License and Collaboration Agreement (the "Otsuka Agreement") with Otsuka Pharmaceutical Co., Ltd. ("Otsuka"). Pursuant to the Otsuka Agreement, the Company granted Otsuka exclusive development and commercialization rights to NEXLETOL and NEXLIZET in Japan. Otsuka will be responsible for all development, regulatory, and commercialization activities in Japan. In addition, Otsuka will fund all clinical development costs associated with the program in Japan. The Company received an upfront cash payment of $60 million in April 2020 and will receive up to an additional $450 million in total development and sales milestones. The Company will also receive tiered royalties ranging from 15 percent to 30 percent on net sales in Japan. The Company is conducting a global cardiovascular outcomes trial ("CVOT")—known as C L E A R 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. The Company received approval by the FDA in February 2020 to commercialize NEXLETOL and NEXLIZET in the U.S., and accordingly commenced principal operations on March 30, 2020 with the commercialization of NEXLETOL. The Company is subject to risks and uncertainties which include the need to successfully commercialize its products, research, develop, and clinically test therapeutic products; obtain regulatory approvals for its products; expand its management, commercial and scientific staff; and finance its operations with an ultimate goal of achieving profitable operations. The Company has sustained annual operating losses since inception and expects such losses to continue over the foreseeable future. While management believes current cash resources and future cash received from the Company's net product sales, collaboration agreements with Daiichi Sankyo Europe GmbH ("DSE") and Otsuka, entered into on January 2, 2019 and April 17, 2020, respectively, and from the Revenue Interest Purchase Agreement (“RIPA”) with Eiger III SA LLC (“Oberland”), an affiliate of Oberland Capital LLC, and the Purchasers named therein, entered into on June 26, 2019, will fund operations for the foreseeable future, management may continue to fund operations and advance the development of the Company's products and product candidates through a combination of collaborations with third parties, strategic alliances, licensing arrangements, permitted debt financings, permitted royalty-based financings, and permitted private and public equity offerings or through other sources. If adequate funds are not available, the Company may not be able to continue the development of its current products or future product candidates, or to commercialize its current or future product candidates, if approved. Basis of Presentation The accompanying condensed financial statements are unaudited and were prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“GAAP”). In the opinion of management, the Company has made all adjustments, which include only normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods presented. Certain prior year amounts have been reclassified to conform with current year presentation. Certain information and disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2019, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the interim periods are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues, expenses and related disclosures. Actual results could differ from those estimates. Cash and Cash Equivalents 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. Restricted Cash Restricted cash consists of legally restricted amounts held by financial institutions pursuant to contractual arrangements. 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 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. The Company relies on third-party manufacturers and suppliers for manufacturing and supply of its products. The instability of manufacturers to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with the suppliers or manufacturer, or an adverse change in their business could materially impact the Company. Although there are potential sources of supply other than the Company's existing suppliers, new suppliers are required to qualify under applicable regulatory requirements. The Company enters into a limited number of distribution agreements with distributors and specialty pharmacies. The Company's net product sales are with these customers. As of March 31, 2020, one customer accounted for all of the Company's net trade receivables. 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, restricted cash and investments are carried at fair value. Financial instruments, including other prepaid and current assets, accounts payable and accrued liabilities are carried at cost, which approximates fair value. Debt is carried at amortized cost, which approximates fair value. Other Prepaid and Current Assets Other prepaid and current assets represent the Company's right for goods or services for which the Company has prepaid as well as net trade receivables from the Company's wholesalers from the sale of its products. Trade receivables are recorded net of the estimated variable consideration for prompt pay discounts and chargebacks based on contractual terms and the Company's expectation regarding the utilization and earnings of the chargebacks and discounts as well as the net amount expected to be collected from the Company's customers. Estimates of the Company's credit losses are determined based on existing contractual payment terms, individual customer circumstances, and any changes to the economic environment. Accrued interest receivables related to available-for-sale debt securities are classified as "Other Prepaid and Current Assets" on the condensed balance sheets. Any credit losses related to accrued interest receivables are recorded by reversing interest income. Inventories Inventories are stated at the lower of cost or net realizable value and recognized on a first-in, first-out ("FIFO") method. The Company uses standard cost to determine the cost basis for inventory. Inventory is capitalized based on when future economic benefit is expected to be realized. The Company began capitalizing inventory upon receiving FDA approval for NEXLETOL and NEXLIZET on February 21, 2020 and February 26, 2020, respectively. Prior to the FDA approval of NEXLETOL and NEXLIZET, expenses associated with the manufacturing of the Company's products were recorded as research and development expense. The Company analyzes its inventory levels on a periodic basis to determine if any inventory is at risk for expiration prior to sale or has a cost basis that is greater than its estimated future net realizable value. Any adjustments are recognized through cost of sales in the period in which they are incurred. 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 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 March 31, 2020. Leases The Company reviews all arrangements to determine if the contract contains a lease or an embedded lease using the criteria in Accounting Standards Codification (“ASC”) 842. If a lease is identified, the Company reviews the consideration in the contract and separates the lease components from the nonlease components. In addition, the Company reviews the classification of the lease between operating and finance leases. According to ASC 842, lessees should discount lease payments at the lease commencement date using the rate implicit in the lease. If the rate implicit in the lease is not readily determinable, a lessee must use its incremental borrowing rate for purposes of classifying the lease and measuring the right-of-use asset and liability. To the extent the rate is not implicit in the lease, the Company uses the incremental borrowing rate it would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. Revenue Interest Liability The revenue interest liability is presented net of deferred issuance costs on the condensed balance sheets. The Company imputes interest expense associated with this liability using the effective interest rate method. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate on the liability may vary during the term of the agreement depending on a number of factors, including the level of forecasted net sales. The Company evaluates the interest rate quarterly based on its current net sales forecasts utilizing the prospective method. Revenue Recognition In accordance with ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: identify the contracts with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when or as the entity satisfies a performance obligation. At contract inception the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. The Company derives revenue through two primary sources: collaboration revenue and product sales. Collaboration revenue consists of the collaboration payments to the Company for collaboration arrangements outside of the United States for the development, manufacturing and commercialization of the Company's product candidates by the Company's partners and product sales consists of sales of NEXLETOL. a. Collaboration Revenue The Company has entered into an agreement related to its activities to develop, manufacture, and commercialize its product candidates. The Company earns collaboration revenue in connection with a collaboration agreement to develop and/or commercialize product candidates where the Company deems the collaborator to be the customer. Revenue is recognized when (or as) the Company satisfies performance obligations under the terms of a contract. Depending on the terms of the arrangement, the Company may defer the recognition of all or a portion of the consideration received as the performance obligations are satisfied. The collaboration agreements may require the Company to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate. In an agreement involving multiple goods or services promised to be transferred to a customer, the Company must assess, at the inception of the contract, whether each promise represents a separate performance obligation (i.e., is "distinct"), or whether such promises should be combined as a single performance obligation. The terms of the agreement typically include consideration to be provided to the Company in the form of non-refundable up-front payments, development milestones, sales milestones, and royalties on sales of products within a respective territory. At the inception of the contract, the transaction price reflects the amount of consideration the Company expects to be entitled to in exchange for transferring promised goods or services to its customer. In the arrangement where the Company satisfies performance obligation(s) during the regulatory phase over time, the Company recognizes collaboration revenue typically using an input method on the basis of regulatory costs incurred relative to the total expected cost which determines the extent of progress toward completion. The Company reviews the estimate of the transaction price and the total expected cost each period, and makes revisions to such estimates as necessary. For sales-based milestones and royalties based on sales of product in a territory, the Company applies the sales-based royalty exception in ASC 606-10-55-65 to all of these milestones and royalties. Under the Company's collaboration agreements, product sales and cost of sales may be recorded by the Company's collaborators as they are deemed to be the principal in the transaction. The Company receives royalties from the commercialization of such products, and records its share of the variable consideration, representing a percentage of net product sales, as collaboration revenue in the period in which such underlying sales occur and costs are incurred by the collaborator. The collaborator will provide the Company with estimates of its royalties for such quarter; these estimates are reconciled to actual results in the subsequent quarter, and the royalty is adjusted accordingly, as necessary. b. Product Sales, Net On February 21, 2020, the Company announced that the FDA approved NEXLETOL as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with HeFH or established ASCVD who require additional lowering of LDL-C. On March 30, 2020, NEXLETOL was commercially available in the U.S. through prescription. NEXLETOL net product sales totaled $0.9 million for the three months ended March 31, 2020. The Company sells NEXLETOL to wholesalers in the U.S and, in accordance with ASC 606, recognizes revenue at the point in time when the customer is deemed to have obtained control of the product. The customer is deemed to have obtained control of the product at the time of physical receipt of the product at the customers’ distribution facilities, or Free on Board (“FOB”) destination, the terms of which are designated in the contract. Product sales are recorded at the net selling price, which includes estimates of variable consideration for which reserves are established for (a) rebates and chargebacks, (b) co-pay assistance programs, (c) distribution fees, (d) product returns, and (e) other discounts. Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as current contractual and statutory requirements, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on the terms of the applicable contract. The amount of variable consideration may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Given the early stage of the Company’s commercial operations it has provided constraint of its variable consideration due to its potential consumption trends. Actual amounts of consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known. Liabilities for co-pay assistance, expected product returns, rebates, and distributor fees are classified as “Other accrued liabilities” in the Condensed Balance Sheets. Discounts, such as prompt pay discounts, and chargebacks are recorded as a reduction to trade accounts receivable, which is included in “Other prepaid and current assets” in the Condensed Balance Sheets. Forms of Variable Consideration Rebates and Chargebacks: Co-pay assistance: Distribution Fees: Product Returns: Discounts: 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 and commercial product manufacturing supply as the Company approaches anticipated approval, 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. 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 annual operating losses since inception. Accordingly, it is not more likely than not that the Company will realize a tax benefit from its deferred tax assets and as such, it has recorded a full valuation allowance. 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. The Company accounts for forfeitures as they occur. Expense is recognized during the period the related services are rendered. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13 which requires financial instruments to be recognized at an estimate of current expected credit losses. As part of the ASU, financial assets measured at amortized cost will be presented at the net amount expected to be collected. In addition, companies will recognize an allowance for credit losses on available-for-sale investments rather than reducing the amortized cost in an other-than-temporary impairment. The Company has chosen the practical expedient to exclude accrued interest from both the fair value and the amortized cost basis of available-for-sale debt securities in identifying and measuring an impairment. The Company adopted the standard on January 1, 2020. The adoption of this standard did not have a material impact on the Company's balance sheets, statements of operations or statements of cash flows. In August 2018, the FASB issued ASU 2018-15 which includes provisions to clarify customer's accounting for implementation costs incurred in a cloud computing arrangement. Under the updated guidance, a customer in a cloud computing arrangement that is a service contract should follow the internal-use software guidance to determine how to account for costs incurred in implementation. The updated guidance also requires certain classification on the balance sheets, statements of operations and statements of cash flows as well as additional quantitative and qualitative disclosures. The Company adopted the standard effective January 1, 2020 and has chosen to adopt the standard prospectively. Implementation costs for cloud computing arrangements are capitalized in "Other prepaid and current assets" on the Company's balance sheets. The adoption of this standard did not have a material impact to the Company's balance sheets, statements of operations or statements of cash flows. There have been no other material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. |
Collaborations with Third Parti
Collaborations with Third Parties | 3 Months Ended |
Mar. 31, 2020 | |
Collaborations with Third Parties | |
Collaborations with Third Parties | 3. Collaborations with Third Parties Agreement Terms On January 2, 2019, the Company entered into a license and collaboration agreement with DSE. Pursuant to the agreement, the Company granted DSE exclusive commercialization rights to bempedoic acid and the bempedoic acid / ezetimibe combination tablets in the European Economic Area and Switzerland (“DSE Territory”). DSE will be responsible for commercialization in the DSE Territory. The Company remains responsible for clinical development, regulatory and manufacturing activities for the licensed products globally, including in the DSE Territory. Pursuant to the agreement, the consideration consists of a $150.0 million upfront cash payment as well as $150.0 million cash payment to the Company upon first commercial sales in the DSE Territory. The Company is also eligible to receive a substantial additional regulatory milestone payment upon the grant of the marketing authorisation in the European Union for the CV risk reduction label, depending on the range of relative risk reduction in the CLEAR Outcomes study. In addition, the Company is eligible to receive additional sales milestone payments related to total net sales achievements for DSE in the DSE Territory. Finally, the Company will receive tiered fifteen percent (15%) to twenty-five percent (25%) royalties on net DSE Territory sales. The agreement calls for both parties to participate in a Joint Collaboration Committee (the “JCC”). The JCC is comprised of executive management from each company and the Company will lead in all aspects related to development and DSE will lead in all aspects related to commercialization in the DSE Territory. Collaboration Revenue The Company considered the guidance under ASC 606 and concluded that the agreement was in the scope of ASC 606. The Company concluded that the upfront payment of $150.0 million should be included in the transaction price and related to the following performance obligations under the agreement: 1) the license to the Company’s intellectual property and 2) the obligation to provide ongoing regulatory and development activities. The Company used the adjusted market assessment approach in determining the standalone selling price of the Company’s intellectual property and the expected cost plus margin approach in determining the standalone selling price of the Company’s obligation to provide ongoing regulatory and development activities. In the three months ended March 31, 2020, the Company recognized $1.0 million related to the on-going performance obligation related to the ongoing regulatory efforts related to the MAA in the DSE Territory. In the three months ended March 31, 2019, the Company recognized $145.4 million of collaboration revenue related to the $150 million upfront payment. The $145.4 million related to the performance obligations for the license to the Company’s intellectual property and a portion of ongoing regulatory and development activities conducted during the period ended March 31, 2019, in the amounts of $144.4 million and $1.0 million, respectively. The remaining $0.7 million of the upfront payment was deferred as of March 31, 2020 due to an on-going performance obligation related to the ongoing regulatory efforts related to the MAA in the DSE Territory. This deferred revenue will be recognized ratably over the period leading up to the transfer of the MAA by the EMA. All future potential milestone amounts were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606 due to the fact that such amounts hinge on development activities, regulatory approvals and sales-based milestones. Additionally, the Company expects that any consideration related to royalties and sales-based milestones will be recognized when the subsequent sales occur. The Company has not yet recognized any revenue for milestone payments as the related regulatory and commercial milestones have not yet been achieved. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventories | |
Inventories | 4. Inventories Inventories as of March 31, 2020 and December 31, 2019 consist of the following: March 31, 2020 December 31, 2019 Raw materials $ 1,143 $ — Work in process 523 — Finished goods 175 — $ 1,841 $ — The Company has entered into a contract manufacturing agreement with a third party commercial manufacturing organization for the production of certain inventory supplies of NEXLETOL and NEXLIZET. The agreement has an initial term of three years and will renew automatically for successive periods of one year each unless terminated by either party. Under the agreement the Company is obligated to purchase minimum order commitments on a rolling twelve-month period for the batches of inventory supplies produced. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 5. Commitments and Contingencies On January 12, 2016, a purported stockholder of the Company filed a putative class action lawsuit in the United States District Court for the Eastern District of Michigan, against the Company and Tim Mayleben, captioned Kevin L. Dougherty v. Esperion Therapeutics, Inc., et al. court by mandate from the Sixth Circuit. On December 26, 2018, the Company filed an answer to the amended complaint, and on March 28, 2019, the Company filed its amended answer to the amended complaint. The Company is unable to predict the outcome of this matter and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome. On December 15, 2016, a purported stockholder of the Company filed a derivative lawsuit in the Court of Chancery of the State of Delaware against Tim Mayleben, Roger Newton, Mary McGowan, Nicole Vitullo, Dov Goldstein, Daniel Janney, Antonio Gotto Jr., Mark McGovern, Gilbert Omenn, Scott Braunstein, and Patrick Enright. The Company is named as a nominal defendant. The lawsuit alleges that the defendants breached their fiduciary duties to the Company when they made or approved improper statements on August 17, 2015, regarding the Company’s lead product candidate’s path to FDA approval, and failed to ensure that reliable systems of internal controls were in place at the Company. On February 8, 2019, the Company and defendants filed a motion to dismiss the derivative lawsuit. On April 23, 2019, the plaintiff filed an opposition to the motion to dismiss the derivative lawsuit, and the Company filed a reply brief on May 15, 2019. On November 6, 2019, the court held a hearing on the motion to dismiss. On February 13, 2020, the court granted the motion to dismiss with prejudice and entered judgment in the Company’s favor. On March 16, 2020, the plaintiff filed a notice of appeal to the Supreme Court of Delaware. The lawsuit seeks, among other things, any damages sustained by the Company as a result of the defendants’ alleged breaches of fiduciary duties, including damages related to the above-referenced securities class action, an order directing the Company to take all necessary actions to reform and improve its corporate governance and internal procedures, restitution from the defendants, and attorneys’ fees and costs. The Company is unable to predict the outcome of this matter and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome. There have been no other material changes to the Company’s contractual obligations and commitments and contingencies outside the ordinary course of business from those previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 other than the Revenue Interest Purchase Agreement disclosed in Note 8 “Liability Related to the Revenue Interest Purchase Agreement.” |
Investments
Investments | 3 Months Ended |
Mar. 31, 2020 | |
Investments | |
Investments | 6. Investments The following table summarizes the Company’s cash equivalents and investments: March 31, 2020 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 128,119 $ — $ — $ 128,119 U.S. treasury notes 3,745 5 — 3,750 Short-term investments: U.S. treasury notes 1,246 4 — 1,250 Commercial paper 6,681 — — 6,681 Total $ 139,791 $ 9 $ — $ 139,800 December 31, 2019 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 20,970 $ — $ — $ 20,970 U.S. treasury notes 2,497 — — 2,497 Commercial paper 4,494 — — 4,494 Short-term investments: Certificates of deposit 245 — — 245 U.S treasury notes 29,155 23 — 29,178 Commercial paper 5,228 — — 5,228 Total $ 62,589 $ 23 $ — $ 62,612 At March 31, 2020, remaining contractual maturities of investments classified as current on the balance sheets were less than 12 months. During the three months ended March 31, 2020, other income, net in the statements of operations includes interest income on investments of $0.4 million, and income for the accretion of premiums and discounts on investments of $0.1 million, respectively. During the three months ended March 31, 2019, other income, net in the statements of operations includes interest income on investments of $0.4 million, and income for the accretion of premiums and discounts on investments of $0.1 million, respectively. There were no unrealized gains or losses on investments reclassified from accumulated other comprehensive loss to other income in the statements of operations during the three months ended March 31, 2020 and 2019. In the three months ended March 31, 2020, there were no allowances for credit losses and all unrealized gains for available-for-sale securities were recognized in accumulated other comprehensive income. In the three months ended March 31, 2020, the Company had no accrued interest receivables. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | 7. Fair Value Measurements The Company follows accounting guidance that emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements are defined on a three level hierarchy: Level 1 inputs: Quoted prices for identical assets or liabilities in active markets; Level 2 inputs: Observable inputs other than Level 1 prices, such as quoted market prices for similar assets or liabilities or other inputs that are observable or can be corroborated by market data; and Level 3 inputs: Unobservable inputs that are supported by little or no market activity and require the reporting entity to develop assumptions that market participants would use when pricing the asset or liability. The following table presents the Company’s financial assets and liabilities that have been measured at fair value on a recurring basis: Description Total Level 1 Level 2 Level 3 (in thousands) March 31, 2020 Assets: Money market funds $ 128,119 $ 128,119 $ — $ — Investments: U.S. treasury notes 5,000 5,000 — — Commercial paper 6,681 — 6,681 — Total assets at fair value $ 139,800 $ 133,119 $ 6,681 $ — December 31, 2019 Assets: Money market funds $ 20,970 $ 20,970 $ — $ — Investments: Certificates of deposit 245 245 — — U.S. treasury notes 31,675 31,675 — — Commercial paper 9,722 — 9,722 — Total assets at fair value $ 62,612 $ 52,890 $ 9,722 $ — At March 31, 2020, the fair value of the $161.7 million revenue interest liability is based on the Company’s current estimates of future revenues expected to be paid to Oberland, over the life of the RIPA. The liability is considered a Level 3 input based on the three level hierarchy. Refer to Note 8 “Liability Related to the Revenue Interest Purchase Agreement” for further information. There were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2020 and 2019. |
Liability Related to the Revenu
Liability Related to the Revenue Interest Purchase Agreement | 3 Months Ended |
Mar. 31, 2020 | |
Liability Related to the Revenue Interest Purchase Agreement | |
Liability Related to the Revenue Interest Purchase Agreement | 8. Liability Related to the Revenue Interest Purchase Agreement On June 26, 2019, the Company entered into a RIPA with Oberland, as agent for purchasers party thereto (the “Purchasers”), and the Purchasers named therein, to obtain financing in respect to the commercialization and further development of bempedoic acid and the bempedoic acid / ezetimibe combination tablets and other working capital needs. Pursuant to the RIPA, the Company received $125.0 million at closing, less certain issuance costs. The Company is also entitled to receive up to approximately $75.0 million in subsequent installments subject to the terms and conditions set forth in the RIPA: (i) $25.0 million upon certain regulatory approval of its product candidates and (ii) $50.0 million, at the Company’s option, upon reaching $100.0 million trailing worldwide six-month net sales any time prior to December 31, 2021 (the “Third Payment”). In March 2020, the Company received $25.0 million from Oberland upon receiving regulatory approval of NEXLETOL. As consideration for such payments, the Purchasers have a right to receive certain revenue interests (the “Revenue Interests”) from the Company based upon net sales of the Company’s certain products which will be tiered payments initially ranging from 2.5% to 7.5% of the Company’s net sales in the covered territory (the “Covered Territory”); provided that (a) if annual net sales equal or exceed $350.0 million by December 31, 2021 (the “Sales Threshold”), the initially tiered revenue interest rate will be decreased to a single rate of 2.5% of the Company’s net sales in the Covered Territory, beginning on January 1, 2022, and (b) if annual net sales equal or exceed the Sales Threshold and if the Purchasers receive 100% of their invested capital by December 31, 2024, the revenue interest rate will be decreased to a single rate of 0.4% of the Company’s net sales in the Covered Territory beginning on January 1, 2025. If the Third Payment is drawn down by the Company, the applicable royalty rates will increase by one-third . The Covered Territory is the United States, but is subject to expand to include the world-wide net sales if the Company’s annual U.S. net sales are less than $350.0 million for the year ended December 31, 2021. The U.S. net sales milestone thresholds are not to be taken as financial guidance. The Purchasers’ rights to receive the Revenue Interests shall terminate on the date on which the Purchasers have received Revenue Interests payments of 195% of the then aggregate purchase price (the “Cumulative Purchaser Payments”) paid to the Company, unless the RIPA is terminated earlier. Under the RIPA, the Company has an option (the “Call Option”) to terminate the RIPA and repurchase future Revenue Interests at any time upon advance written notice. Additionally, the Purchasers have an option (the “Put Option”) to terminate the RIPA and to require the Company to repurchase future Revenue Interests upon enumerated events such as a bankruptcy event, an uncured material breach, a material adverse effect or a change of control. If the Put Option is exercised prior to the first anniversary of the closing date by the Purchasers (except pursuant to a change of control), the required repurchase price will be 120% of the Cumulative Purchaser Payments (minus all payments Company has made to the Purchasers in connection with the Revenue Interests). In all other cases, if the Put Option or the Call Option are exercised, the required repurchase price will be 175% of the Cumulative Purchaser Payments (minus all payments Company has made to the Purchasers in connection with the Revenue Interests), if such option is exercised prior to the third anniversary of the closing date, and 195% of the Cumulative Purchaser Payments (minus all payments Company has made to the Purchasers in connection with the Revenue Interests), if such option is exercised thereafter. In addition, the RIPA contains various representations and warranties, information rights, non-financial covenants, indemnification obligations and other provisions that are customary for a transaction of this nature. In connection with the arrangement, as of March 31, 2020, the Company has recorded a liability, referred to as the “Revenue interest liability” in the condensed balance sheets, of $161.7 million, net of $0.5 million of capitalized issuance costs in connection with the RIPA. The Company imputes interest expense associated with this liability using the effective interest rate method. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including the level of forecasted net sales. The Company evaluates the interest rate quarterly based on its current net sales forecasts utilizing the prospective method. A significant increase or decrease in net sales will materially impact the revenue interest liability, interest expense and the time period for repayment. The Company recorded approximately $4.2 million in interest expense related to this arrangement for the three months ended March 31, 2020. The Company received $125.0 million in exchange for entering into the RIPA and $25.0 million in March 2020 upon receiving regulatory approval of NEXLETOL. The effective annual imputed interest rate is 11.9%. The Company incurred $0.6 million of issuance costs in connection with the RIPA, which will be amortized to interest expense over the estimated term of the RIPA. Payments made to Oberland as a result of the Company’s net sales will reduce the revenue interest liability. The following table summarizes the revenue interest liability activity during the three months ended March 31, 2020: (in thousands) Revenue interest liability at December 31, 2019 $ 132,544 Oberland funding for regulatory approval of NEXLETOL 25,000 Interest expense recognized 4,171 Revenue interest liability at March 31, 2020 $ 161,715 |
Other Accrued Liabilities
Other Accrued Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Other Accrued Liabilities | |
Other Accrued Liabilities | 9. Other Accrued Liabilities Other accrued liabilities consist of the following: March 31, December 31, 2020 2019 (in thousands) Accrued compensation $ 7,343 $ 7,818 Accrued professional fees 11,451 3,842 Accrued inventory 1,563 — Accrued other 3,213 211 Total other accrued liabilities $ 23,570 $ 11,871 |
Stock Compensation
Stock Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Stock Compensation | |
Stock Compensation | 10. Stock Compensation 2017 Inducement Equity Plan In May 2017, the Company’s board of directors approved the 2017 Inducement Equity Plan (the “2017 Plan”). The number of shares of common stock available for awards under the 2017 Plan was set to 750,000, with any shares of common stock that are forfeited, cancelled, held back upon the exercise or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of common stock, or otherwise terminated (other than by exercise) under the 2017 Plan added back to the shares of common stock available for issuance under the 2017 Plan. In November 2019, the Company’s board of directors approved an amendment to the 2017 Plan to increase the number of shares of common stock available for issuance under the 2017 Plan by 400,000 shares. 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”). The number of shares of common stock available for awards under the 2013 Plan was set to 2,975,000 shares, plus (i) shares of common stock that are forfeited, cancelled, held back upon the exercise or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of common stock or otherwise terminated (other than by exercise) under the 2013 Plan and the Company’s 2008 Incentive Stock Option and Restricted Stock Plan are added back to the shares of common stock available for issuance under the 2013 Plan, and (ii) on January 1, 2016, and each January 1, thereafter, the number of shares of common stock reserved and available for issuance under the 2013 Plan will be cumulatively increased by 2.5% of the number of shares of common stock outstanding on the immediately preceding December 31, or such lesser number of shares of common stock determined by the compensation committee. The 2017 Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), unrestricted stock awards and dividend equivalent rights. The 2013 Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, RSUs, unrestricted stock awards, cash-based awards, performance share awards and dividend equivalent rights. The Company incurs stock-based compensation expense related to stock options and RSUs. The fair value of RSUs is determined by the closing market price of the Company’s common stock on the date of grant. The fair value of stock options is calculated using a Black-Scholes option pricing model. The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation—Stock Compensation. Accordingly, compensation costs related to equity instruments granted are recognized over the requisite service periods of the awards on a straight-line basis at the grant-date fair value. The Company accounts for forfeitures as they occur. The following table summarizes the activity relating to the Company’s options to purchase common stock for the three months ended March 31, 2020: Weighted-Average Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Options Per Share Term (Years) Value (in thousands) Outstanding at December 31, 2019 4,677,929 $ 39.31 6.82 $ 109,054 Granted 234,940 $ 61.14 Forfeited or expired (43,282) $ 48.24 Exercised (40,133) $ 25.21 Outstanding at March 31, 2020 4,829,454 $ 40.41 6.62 $ 31,070 The following table summarizes information about the Company’s stock option plan as of March 31, 2020: Weighted-Average Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Options Per Share Term (Years) Value (in thousands) Vested and expected to vest at March 31, 2020 4,829,454 $ 40.41 6.62 $ 31,070 Exercisable at March 31, 2020 3,160,857 $ 34.92 5.59 $ 28,706 During the three months ended March 31, 2020 and 2019, the Company recognized $5.6 million and $6.4 million, respectively, of stock-based compensation expense related to stock options. As of March 31, 2020, there was $51.8 million of unrecognized stock-based compensation expense related to unvested options, which will be recognized over a weighted-average period of 2.6 years. The following table summarizes the activity relating to the Company’s RSUs for the three months ended March 31, 2020: Weighted-Average Number of Fair Value Per RSUs Share Outstanding and unvested at December 31, 2019 245,966 $ 44.45 Granted 177,824 $ 59.93 Forfeited or expired (23,939) $ 43.03 Vested (10,089) $ 53.60 Outstanding and unvested at March 31, 2020 389,762 $ 51.36 During the three months ended March 31, 2020 and 2019, the Company recognized $1.5 million and $0.2 million, respectively, of stock-based compensation expense related to RSUs. As of March 31, 2020, there was $17.3 million of unrecognized stock-based compensation expense related to unvested RSUs, which will be recognized over a weighted-average period of 3.5 years. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases | |
Leases | 11. Leases The Company has operating leases primarily related to the Company’s principal executive office, automobile leases and other IT related equipment. The lease for the principal executive office has a lease term of 5 years and the automobile leases and IT equipment leases primarily have a term of 3 years. During the three months ended March 31, 2020, the right of use operating lease assets and operating lease liabilities recognized on the condensed balance sheet increased by $4.0 million, and $4.1 million from December 31, 2019, respectively, due to the addition of automobile leases and IT equipment associated with the onboarding of the Company’s commercial salesforce to support the commercialization of NEXLETOL and NEXLIZET. During the three months ended March 31, 2020 and 2019, the Company recognized $0.2 million and $0.1 million, respectively, of operating lease costs, recognized on the Condensed Statements of Operations, and paid cash for the amounts included in the measurement of lease liabilities of $0.2 million and $0.1 million, respectively, which were included in operating cash flows on the Condensed Statements of Cash Flows. At March 31, 2020, the weighted-average remaining lease term of operating leases was 3.0 years and the weighted average discount rate was 4.0%. There were no right-of-use assets obtained in exchange for lease obligations in the three months ended March 31, 2020 or 2019. The Company had no additional operating and finance leases that have not yet commenced as of March 31, 2020 or 2019. The following table summarizes the Company’s future maturities of operating lease liabilities as of March 31, 2020: (in thousands) 2020 $ 1,589 2021 1,975 2022 1,928 2023 471 2024 — Total lease payments 5,963 Less imputed interest 331 Total $ 5,632 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Income Taxes | 12. Income Taxes There was no provision for income taxes for the three months ended March 31, 2020 and 2019, because the Company has incurred annual operating losses since inception. At March 31, 2020, the Company continues to conclude that it is not more likely than not that the Company will realize the benefit of its deferred tax assets due to its history of losses. Accordingly, a full valuation allowance has been applied against the net deferred tax assets. |
Net Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 3 Months Ended |
Mar. 31, 2020 | |
Net Income (Loss) Per Common Share | |
Net Income (Loss) Per Common Share | 13. Net Income (Loss) Per Common Share Basic net loss per share and basic net income per share is calculated by dividing net loss or net income by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net income per share is computed by dividing net income by the weighted-average number of common stock equivalents outstanding for the period, including shares that potentially could be dilutive if they were exercised during the period, determined using the treasury-stock method. For purposes of this calculation, stock options and unvested RSUs are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. March 31, March 31, 2020 2019 Net income (loss) (in thousands) $ (78,249) $ 87,379 Weighted average shares – basic 27,519,229 26,842,785 Effect of dilutive shares: Warrants for common stock — 5,443 Common shares under option — 1,601,288 Unvested RSUs — 251 Dilutive shares — 1,606,982 Weighted average shares – diluted 27,519,229 28,449,767 Net income (loss) per common share – basic $ (2.84) $ 3.26 Net income (loss) per common share – diluted $ (2.84) $ 3.07 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: March 31, March 31, 2020 2019 Common shares under option 4,829,454 2,288,037 Unvested RSUs 389,762 34,350 Total potential dilutive shares 5,219,216 2,322,387 |
Statements of Cash Flows
Statements of Cash Flows | 3 Months Ended |
Mar. 31, 2020 | |
Statements of Cash Flows. | |
Statements of Cash Flows | 14. Statements of Cash Flows The following table provides a reconciliation of cash and cash equivalents and restricted cash presented on the Condensed Balance Sheets to the same amounts presented on the Condensed Statements of Cash Flows on March 31, 2020 and 2019. March 31, March 31, 2020 2019 Cash and cash equivalents $ 149,386 $ 174,836 Restricted cash 928 1,193 Total cash and cash equivalents and restricted cash shown on the Condensed Statements of Cash Flows $ 150,314 $ 176,029 + |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events | |
Subsequent Events | 15. Subsequent Events Collaboration Agreement with Otsuka Pharmaceutical Co, Ltd. On April 17, 2020, the Company entered into a License and Collaboration Agreement (the "Otsuka Agreement") with Otsuka. Pursuant to the Otsuka Agreement, the Company granted Otsuka exclusive development and commercialization rights to NEXLETOL and NEXLIZET in Japan. Otsuka will be responsible for all development, regulatory, and commercialization activities in Japan. In addition, Otsuka will fund all clinical development costs associated with the program in Japan. The Company estimates this amount to total up to |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues, expenses and related disclosures. Actual results could differ from those estimates. |
Cash and Cash Equivalents | 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. |
Restricted Cash | Restricted Cash Restricted cash consists of legally restricted amounts held by financial institutions pursuant to contractual arrangements. |
Investments | 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 | Concentration of 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. The Company relies on third-party manufacturers and suppliers for manufacturing and supply of its products. The instability of manufacturers to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with the suppliers or manufacturer, or an adverse change in their business could materially impact the Company. Although there are potential sources of supply other than the Company's existing suppliers, new suppliers are required to qualify under applicable regulatory requirements. The Company enters into a limited number of distribution agreements with distributors and specialty pharmacies. The Company's net product sales are with these customers. As of March 31, 2020, one customer accounted for all of the Company's net trade receivables. |
Segment Information | 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 | Fair Value of Financial Instruments The Company's cash, cash equivalents, restricted cash and investments are carried at fair value. Financial instruments, including other prepaid and current assets, accounts payable and accrued liabilities are carried at cost, which approximates fair value. Debt is carried at amortized cost, which approximates fair value. |
Other Prepaid and Current Assets | Other Prepaid and Current Assets Other prepaid and current assets represent the Company's right for goods or services for which the Company has prepaid as well as net trade receivables from the Company's wholesalers from the sale of its products. Trade receivables are recorded net of the estimated variable consideration for prompt pay discounts and chargebacks based on contractual terms and the Company's expectation regarding the utilization and earnings of the chargebacks and discounts as well as the net amount expected to be collected from the Company's customers. Estimates of the Company's credit losses are determined based on existing contractual payment terms, individual customer circumstances, and any changes to the economic environment. Accrued interest receivables related to available-for-sale debt securities are classified as "Other Prepaid and Current Assets" on the condensed balance sheets. Any credit losses related to accrued interest receivables are recorded by reversing interest income. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value and recognized on a first-in, first-out ("FIFO") method. The Company uses standard cost to determine the cost basis for inventory. Inventory is capitalized based on when future economic benefit is expected to be realized. The Company began capitalizing inventory upon receiving FDA approval for NEXLETOL and NEXLIZET on February 21, 2020 and February 26, 2020, respectively. Prior to the FDA approval of NEXLETOL and NEXLIZET, expenses associated with the manufacturing of the Company's products were recorded as research and development expense. The Company analyzes its inventory levels on a periodic basis to determine if any inventory is at risk for expiration prior to sale or has a cost basis that is greater than its estimated future net realizable value. Any adjustments are recognized through cost of sales in the period in which they are incurred. |
Property and Equipment, Net | 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 |
Impairment of Long-Lived 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 March 31, 2020. |
Leases | Leases The Company reviews all arrangements to determine if the contract contains a lease or an embedded lease using the criteria in Accounting Standards Codification (“ASC”) 842. If a lease is identified, the Company reviews the consideration in the contract and separates the lease components from the nonlease components. In addition, the Company reviews the classification of the lease between operating and finance leases. According to ASC 842, lessees should discount lease payments at the lease commencement date using the rate implicit in the lease. If the rate implicit in the lease is not readily determinable, a lessee must use its incremental borrowing rate for purposes of classifying the lease and measuring the right-of-use asset and liability. To the extent the rate is not implicit in the lease, the Company uses the incremental borrowing rate it would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. |
Revenue Interest Liability | Revenue Interest Liability The revenue interest liability is presented net of deferred issuance costs on the condensed balance sheets. The Company imputes interest expense associated with this liability using the effective interest rate method. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate on the liability may vary during the term of the agreement depending on a number of factors, including the level of forecasted net sales. The Company evaluates the interest rate quarterly based on its current net sales forecasts utilizing the prospective method. |
Revenue Recognition | Revenue Recognition In accordance with ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: identify the contracts with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when or as the entity satisfies a performance obligation. At contract inception the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. The Company derives revenue through two primary sources: collaboration revenue and product sales. Collaboration revenue consists of the collaboration payments to the Company for collaboration arrangements outside of the United States for the development, manufacturing and commercialization of the Company's product candidates by the Company's partners and product sales consists of sales of NEXLETOL. a. Collaboration Revenue The Company has entered into an agreement related to its activities to develop, manufacture, and commercialize its product candidates. The Company earns collaboration revenue in connection with a collaboration agreement to develop and/or commercialize product candidates where the Company deems the collaborator to be the customer. Revenue is recognized when (or as) the Company satisfies performance obligations under the terms of a contract. Depending on the terms of the arrangement, the Company may defer the recognition of all or a portion of the consideration received as the performance obligations are satisfied. The collaboration agreements may require the Company to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate. In an agreement involving multiple goods or services promised to be transferred to a customer, the Company must assess, at the inception of the contract, whether each promise represents a separate performance obligation (i.e., is "distinct"), or whether such promises should be combined as a single performance obligation. The terms of the agreement typically include consideration to be provided to the Company in the form of non-refundable up-front payments, development milestones, sales milestones, and royalties on sales of products within a respective territory. At the inception of the contract, the transaction price reflects the amount of consideration the Company expects to be entitled to in exchange for transferring promised goods or services to its customer. In the arrangement where the Company satisfies performance obligation(s) during the regulatory phase over time, the Company recognizes collaboration revenue typically using an input method on the basis of regulatory costs incurred relative to the total expected cost which determines the extent of progress toward completion. The Company reviews the estimate of the transaction price and the total expected cost each period, and makes revisions to such estimates as necessary. For sales-based milestones and royalties based on sales of product in a territory, the Company applies the sales-based royalty exception in ASC 606-10-55-65 to all of these milestones and royalties. Under the Company's collaboration agreements, product sales and cost of sales may be recorded by the Company's collaborators as they are deemed to be the principal in the transaction. The Company receives royalties from the commercialization of such products, and records its share of the variable consideration, representing a percentage of net product sales, as collaboration revenue in the period in which such underlying sales occur and costs are incurred by the collaborator. The collaborator will provide the Company with estimates of its royalties for such quarter; these estimates are reconciled to actual results in the subsequent quarter, and the royalty is adjusted accordingly, as necessary. b. Product Sales, Net On February 21, 2020, the Company announced that the FDA approved NEXLETOL as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with HeFH or established ASCVD who require additional lowering of LDL-C. On March 30, 2020, NEXLETOL was commercially available in the U.S. through prescription. NEXLETOL net product sales totaled $0.9 million for the three months ended March 31, 2020. The Company sells NEXLETOL to wholesalers in the U.S and, in accordance with ASC 606, recognizes revenue at the point in time when the customer is deemed to have obtained control of the product. The customer is deemed to have obtained control of the product at the time of physical receipt of the product at the customers’ distribution facilities, or Free on Board (“FOB”) destination, the terms of which are designated in the contract. Product sales are recorded at the net selling price, which includes estimates of variable consideration for which reserves are established for (a) rebates and chargebacks, (b) co-pay assistance programs, (c) distribution fees, (d) product returns, and (e) other discounts. Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as current contractual and statutory requirements, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on the terms of the applicable contract. The amount of variable consideration may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Given the early stage of the Company’s commercial operations it has provided constraint of its variable consideration due to its potential consumption trends. Actual amounts of consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known. Liabilities for co-pay assistance, expected product returns, rebates, and distributor fees are classified as “Other accrued liabilities” in the Condensed Balance Sheets. Discounts, such as prompt pay discounts, and chargebacks are recorded as a reduction to trade accounts receivable, which is included in “Other prepaid and current assets” in the Condensed Balance Sheets. Forms of Variable Consideration Rebates and Chargebacks: Co-pay assistance: Distribution Fees: Product Returns: Discounts: |
Research and Development | 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 and commercial product manufacturing supply as the Company approaches anticipated approval, 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 | 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. |
Income Taxes | 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 annual operating losses since inception. Accordingly, it is not more likely than not that the Company will realize a tax benefit from its deferred tax assets and as such, it has recorded a full valuation allowance. |
Stock-Based Compensation | 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. The Company accounts for forfeitures as they occur. Expense is recognized during the period the related services are rendered. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13 which requires financial instruments to be recognized at an estimate of current expected credit losses. As part of the ASU, financial assets measured at amortized cost will be presented at the net amount expected to be collected. In addition, companies will recognize an allowance for credit losses on available-for-sale investments rather than reducing the amortized cost in an other-than-temporary impairment. The Company has chosen the practical expedient to exclude accrued interest from both the fair value and the amortized cost basis of available-for-sale debt securities in identifying and measuring an impairment. The Company adopted the standard on January 1, 2020. The adoption of this standard did not have a material impact on the Company's balance sheets, statements of operations or statements of cash flows. In August 2018, the FASB issued ASU 2018-15 which includes provisions to clarify customer's accounting for implementation costs incurred in a cloud computing arrangement. Under the updated guidance, a customer in a cloud computing arrangement that is a service contract should follow the internal-use software guidance to determine how to account for costs incurred in implementation. The updated guidance also requires certain classification on the balance sheets, statements of operations and statements of cash flows as well as additional quantitative and qualitative disclosures. The Company adopted the standard effective January 1, 2020 and has chosen to adopt the standard prospectively. Implementation costs for cloud computing arrangements are capitalized in "Other prepaid and current assets" on the Company's balance sheets. The adoption of this standard did not have a material impact to the Company's balance sheets, statements of operations or statements of cash flows. There have been no other material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventories | |
Schedule of Inventories | March 31, 2020 December 31, 2019 Raw materials $ 1,143 $ — Work in process 523 — Finished goods 175 — $ 1,841 $ — |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investments | |
Schedule of Company's cash equivalents and investments | March 31, 2020 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 128,119 $ — $ — $ 128,119 U.S. treasury notes 3,745 5 — 3,750 Short-term investments: U.S. treasury notes 1,246 4 — 1,250 Commercial paper 6,681 — — 6,681 Total $ 139,791 $ 9 $ — $ 139,800 December 31, 2019 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 20,970 $ — $ — $ 20,970 U.S. treasury notes 2,497 — — 2,497 Commercial paper 4,494 — — 4,494 Short-term investments: Certificates of deposit 245 — — 245 U.S treasury notes 29,155 23 — 29,178 Commercial paper 5,228 — — 5,228 Total $ 62,589 $ 23 $ — $ 62,612 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Schedule of the Company's financial assets and liabilities measured at fair value on a recurring basis | Description Total Level 1 Level 2 Level 3 (in thousands) March 31, 2020 Assets: Money market funds $ 128,119 $ 128,119 $ — $ — Investments: U.S. treasury notes 5,000 5,000 — — Commercial paper 6,681 — 6,681 — Total assets at fair value $ 139,800 $ 133,119 $ 6,681 $ — December 31, 2019 Assets: Money market funds $ 20,970 $ 20,970 $ — $ — Investments: Certificates of deposit 245 245 — — U.S. treasury notes 31,675 31,675 — — Commercial paper 9,722 — 9,722 — Total assets at fair value $ 62,612 $ 52,890 $ 9,722 $ — |
Liability Related to the Reve_2
Liability Related to the Revenue Interest Purchase Agreement (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Liability Related to the Revenue Interest Purchase Agreement | |
Summary of revenue interest liability | (in thousands) Revenue interest liability at December 31, 2019 $ 132,544 Oberland funding for regulatory approval of NEXLETOL 25,000 Interest expense recognized 4,171 Revenue interest liability at March 31, 2020 $ 161,715 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Other Accrued Liabilities | |
Schedule of other accrued liabilities | March 31, December 31, 2020 2019 (in thousands) Accrued compensation $ 7,343 $ 7,818 Accrued professional fees 11,451 3,842 Accrued inventory 1,563 — Accrued other 3,213 211 Total other accrued liabilities $ 23,570 $ 11,871 |
Stock Compensation (Tables)
Stock Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stock Compensation | |
Summary of activity relating to the Company's options to purchase common stock | Weighted-Average Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Options Per Share Term (Years) Value (in thousands) Outstanding at December 31, 2019 4,677,929 $ 39.31 6.82 $ 109,054 Granted 234,940 $ 61.14 Forfeited or expired (43,282) $ 48.24 Exercised (40,133) $ 25.21 Outstanding at March 31, 2020 4,829,454 $ 40.41 6.62 $ 31,070 |
Summary of information about the Company's stock option plan | Weighted-Average Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Options Per Share Term (Years) Value (in thousands) Vested and expected to vest at March 31, 2020 4,829,454 $ 40.41 6.62 $ 31,070 Exercisable at March 31, 2020 3,160,857 $ 34.92 5.59 $ 28,706 |
Summary of activity relating to the Company's RSUs | Weighted-Average Number of Fair Value Per RSUs Share Outstanding and unvested at December 31, 2019 245,966 $ 44.45 Granted 177,824 $ 59.93 Forfeited or expired (23,939) $ 43.03 Vested (10,089) $ 53.60 Outstanding and unvested at March 31, 2020 389,762 $ 51.36 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases | |
Schedule of future maturities of operating lease liabilities | (in thousands) 2020 $ 1,589 2021 1,975 2022 1,928 2023 471 2024 — Total lease payments 5,963 Less imputed interest 331 Total $ 5,632 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Net Income (Loss) Per Common Share | |
Schedule of Earnings Per Share, Basic and Diluted | March 31, March 31, 2020 2019 Net income (loss) (in thousands) $ (78,249) $ 87,379 Weighted average shares – basic 27,519,229 26,842,785 Effect of dilutive shares: Warrants for common stock — 5,443 Common shares under option — 1,601,288 Unvested RSUs — 251 Dilutive shares — 1,606,982 Weighted average shares – diluted 27,519,229 28,449,767 Net income (loss) per common share – basic $ (2.84) $ 3.26 Net income (loss) per common share – diluted $ (2.84) $ 3.07 |
Schedule of the shares outstanding which were excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect | March 31, March 31, 2020 2019 Common shares under option 4,829,454 2,288,037 Unvested RSUs 389,762 34,350 Total potential dilutive shares 5,219,216 2,322,387 |
Statements of Cash Flows (Table
Statements of Cash Flows (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Statements of Cash Flows. | |
Schedule of reconciliation of cash and cash equivalents and restricted cash presented on the Condensed Balance Sheets to the same amounts presented on the Condensed Statements of Cash Flows | March 31, March 31, 2020 2019 Cash and cash equivalents $ 149,386 $ 174,836 Restricted cash 928 1,193 Total cash and cash equivalents and restricted cash shown on the Condensed Statements of Cash Flows $ 150,314 $ 176,029 |
The Company and Basis of Pres_2
The Company and Basis of Presentation (Details) $ in Millions | Apr. 17, 2020USD ($) | Aug. 31, 2019person |
The Company and Basis of Presentation | ||
Number of patients enrolled in the global cardiovascular outcomes trial ("CVOT") | person | 14,032 | |
Subsequent events | Collaborative Arrangement | Otsuka Pharmaceutical Co, Ltd. | Exclusive Development and Commercialization Rights to NEXLETOL and NEXLIZET Tablets | ||
The Company and Basis of Presentation | ||
Upfront cash payment | $ 60 | |
Potential additional future payments | $ 450 | |
Subsequent events | Collaborative Arrangement | Otsuka Pharmaceutical Co, Ltd. | Exclusive Development and Commercialization Rights to NEXLETOL and NEXLIZET Tablets | Minimum | ||
The Company and Basis of Presentation | ||
Percentage of royalties to be received on the net sales | 15.00% | |
Subsequent events | Collaborative Arrangement | Otsuka Pharmaceutical Co, Ltd. | Exclusive Development and Commercialization Rights to NEXLETOL and NEXLIZET Tablets | Maximum | ||
The Company and Basis of Presentation | ||
Percentage of royalties to be received on the net sales | 30.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | |
Mar. 31, 2020USD ($)customersegment | Mar. 31, 2019USD ($) | |
Segment Information | ||
Number of operating segments | segment | 1 | |
Impairment of Long-Lived Assets | ||
Impairment losses | $ 0 | |
Product Sales, Net | ||
Revenue | $ 1,840,000 | $ 145,419,000 |
Minimum | ||
Property and Equipment, Net | ||
Estimated useful lives | 3 years | |
Maximum | ||
Property and Equipment, Net | ||
Estimated useful lives | 10 years | |
Product sales, net | ||
Product Sales, Net | ||
Revenue | $ 858,000 | |
Trade Receivables | Customer Concentration Risk | ||
Concentration of Risk | ||
Number of major customers | customer | 1 |
Collaborations with Third Par_2
Collaborations with Third Parties (Details) - USD ($) $ in Thousands | Jan. 02, 2019 | Mar. 31, 2020 | Mar. 31, 2019 |
Collaborations with Third Parties | |||
Total Revenues | $ 1,840 | $ 145,419 | |
Collaboration revenue | |||
Collaborations with Third Parties | |||
Total Revenues | 982 | 145,419 | |
License for the intellectual property | |||
Collaborations with Third Parties | |||
Total Revenues | 144,400 | ||
Ongoing regulatory activities | |||
Collaborations with Third Parties | |||
Total Revenues | 1,000 | $ 1,000 | |
Regulatory performance obligations | |||
Collaborations with Third Parties | |||
Deferred revenue, Upfront payments | $ 700 | ||
Collaborative Arrangement | Daiichi Sankyo Europe GmbH ("DSE") | |||
Collaborations with Third Parties | |||
Upfront cash payment | $ 150,000 | ||
Cash payment to the Company upon first commercial sales in the DSE Territory | $ 150,000 | ||
Collaborative Arrangement | Daiichi Sankyo Europe GmbH ("DSE") | Minimum | |||
Collaborations with Third Parties | |||
Percentage of royalties to be received on the net sales | 15.00% | ||
Collaborative Arrangement | Daiichi Sankyo Europe GmbH ("DSE") | Maximum | |||
Collaborations with Third Parties | |||
Percentage of royalties to be received on the net sales | 25.00% |
Inventory (Details)
Inventory (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Inventories | |
Raw materials | $ 1,143 |
Work in process | 523 |
Finished goods | 175 |
Total Inventory | $ 1,841 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Investments | |||
Total, Amortized Cost | $ 139,791 | $ 62,589 | |
Gross Unrealized Gains | 9 | 23 | |
Total, Estimated Fair Value | 139,800 | 62,612 | |
Accretion of premiums and discounts on investments | (73) | $ (75) | |
Other income, net | 368 | 450 | |
Allowances for credit losses | 0 | ||
Accrued interest receivables | 0 | ||
Other income, net | |||
Investments | |||
Interest income on investments | 400 | 400 | |
Accretion of premiums and discounts on investments | 100 | 100 | |
Reclassification out of accumulated other comprehensive income (loss) | |||
Investments | |||
Other income, net | 0 | $ 0 | |
Short-term investments | Certificates of deposit | |||
Investments | |||
Investments, Amortized Cost | 245 | ||
Investments, Estimated Fair Value | 245 | ||
Short-term investments | U.S. treasury notes | |||
Investments | |||
Investments, Amortized Cost | 1,246 | 29,155 | |
Gross Unrealized Gains | 4 | 23 | |
Investments, Estimated Fair Value | 1,250 | 29,178 | |
Short-term investments | Commercial paper | |||
Investments | |||
Investments, Amortized Cost | 6,681 | 5,228 | |
Investments, Estimated Fair Value | 6,681 | 5,228 | |
Money market funds | |||
Investments | |||
Cash equivalents | 128,119 | 20,970 | |
Cash equivalents, Estimated Fair Value | 128,119 | 20,970 | |
U.S. treasury notes | |||
Investments | |||
Cash equivalents | 3,745 | 2,497 | |
Gross Unrealized Gains | 5 | ||
Cash equivalents, Estimated Fair Value | $ 3,750 | 2,497 | |
Commercial paper | |||
Investments | |||
Cash equivalents | 4,494 | ||
Cash equivalents, Estimated Fair Value | $ 4,494 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets: | ||
Total, Estimated Fair Value | $ 139,800 | $ 62,612 |
Liabilities: | ||
Fair value of the revenue interest liability | 161,700 | |
Recurring fair value measurement | ||
Assets: | ||
Money market funds | 128,119 | 20,970 |
Total, Estimated Fair Value | 139,800 | 62,612 |
Recurring fair value measurement | Certificates of deposit | ||
Assets: | ||
Investments, Fair Value Disclosure | 245 | |
Recurring fair value measurement | U.S. treasury notes | ||
Assets: | ||
Investments, Fair Value Disclosure | 5,000 | 31,675 |
Recurring fair value measurement | Commercial paper | ||
Assets: | ||
Investments, Fair Value Disclosure | 6,681 | 9,722 |
Recurring fair value measurement | Level 1 | ||
Assets: | ||
Money market funds | 128,119 | 20,970 |
Total, Estimated Fair Value | 133,119 | 52,890 |
Recurring fair value measurement | Level 1 | Certificates of deposit | ||
Assets: | ||
Investments, Fair Value Disclosure | 245 | |
Recurring fair value measurement | Level 1 | U.S. treasury notes | ||
Assets: | ||
Investments, Fair Value Disclosure | 5,000 | 31,675 |
Recurring fair value measurement | Level 2 | ||
Assets: | ||
Total, Estimated Fair Value | 6,681 | 9,722 |
Recurring fair value measurement | Level 2 | Commercial paper | ||
Assets: | ||
Investments, Fair Value Disclosure | $ 6,681 | $ 9,722 |
Liability Related to the Reve_3
Liability Related to the Revenue Interest Purchase Agreement (Details) - USD ($) $ in Thousands | Jun. 26, 2019 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2020 |
Liability Related to the Revenue Interest Purchase Agreement | ||||
Proceeds from revenue interest liability | $ 25,000 | |||
Interest expense | 4,171 | |||
Revenue Interest Purchase Agreement (RIPA) | ||||
Liability Related to the Revenue Interest Purchase Agreement | ||||
Capitalized issuance costs | $ 500 | |||
Interest expense | 4,200 | |||
Summary of activity in revenue interest liability | ||||
Revenue interest liability at December 31, 2019 | 132,544 | |||
Oberland funding for regulatory approval | 25,000 | |||
Interest expense recognized | 4,171 | |||
Revenue interest liability at March 31, 2020 | 161,715 | $ 161,715 | ||
Revenue Interest Purchase Agreement (RIPA) | Oberland | ||||
Liability Related to the Revenue Interest Purchase Agreement | ||||
Proceeds from revenue interest liability | $ 25,000 | |||
Proceeds from revenue interest liability | $ 125,000 | |||
Total amount of subsequent installment, subject to RIPA terms and conditions | 75,000 | |||
Amount of subsequent installment, subject to regulatory approval | 25,000 | |||
Amount of subsequent installment, subject to achievement of Sales Threshold | 50,000 | |||
Milestone amount for worldwide sales to receive the Third Payment | $ 100,000 | |||
Consecutive number of months sales must be at or above milestone amount | 6 months | |||
Revenue interest rate which will take effect if annual net sales equals or exceeds the Sales Threshold by December 31, 2021 | 2.50% | |||
Initial revenue interest rate | 7.50% | |||
Minimum amount of annual net sales to qualify for reduced revenue interest rate by December 31, 2021 | $ 350,000 | |||
Percentage of invested capital received by December 31, 2024, to qualify for second reduced revenue interest rate | 100.00% | |||
Revenue interest rate if annual net sales equal or exceed the Sales Threshold and if the Purchasers receive 100% of their invested capital by December 31, 2024 | 0.40% | |||
Percentage of increase in royalty rate upon drawdown of third payment | 33.33% | |||
Percentage of revenue interests payment on which agreement terminates | 195.00% | |||
Percentage of revenue interests payment on which agreement terminates, if prior to the anniversary of the closing date, if put option is exercised | 120.00% | |||
Percentage of revenue interests payment on which agreement terminates, prior to the third anniversary of the closing date, if put option is exercised | 175.00% | |||
Percentage of revenue interests payment on which agreement terminates, after the third anniversary of the closing date, if put option is exercised | 195.00% | |||
Capitalized issuance costs | $ 600 | |||
Effective annual imputed interest rate (as a percent) | 11.90% |
Other Accrued Liabilities (Deta
Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Other Accrued Liabilities | ||
Accrued compensation | $ 7,343 | $ 7,818 |
Accrued professional fees | 11,451 | 3,842 |
Accrued inventory | 1,563 | |
Accrued other | 3,213 | 211 |
Total other accrued liabilities | $ 23,570 | $ 11,871 |
Stock Compensation (Details)
Stock Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Nov. 30, 2019 | May 31, 2015 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | May 31, 2017 | |
Number of Options | ||||||
Outstanding at the beginning of period (in shares) | 4,677,929 | |||||
Granted (in shares) | 234,940 | |||||
Forfeited or expired (in shares) | (43,282) | |||||
Exercised (in shares) | (40,133) | |||||
Outstanding at the end of the period (in shares) | 4,829,454 | 4,677,929 | ||||
Weighted-Average Exercise Price Per Share | ||||||
Outstanding at the beginning of period (in dollars per share) | $ 39.31 | |||||
Granted (in dollars per share) | 61.14 | |||||
Forfeited or expired (in dollars per share) | 48.24 | |||||
Exercised (in dollars per share) | 25.21 | |||||
Outstanding at the end of the period (in dollars per share) | $ 40.41 | $ 39.31 | ||||
Weighted-Average Remaining Contractual Term (Years) | ||||||
Outstanding | 6 years 7 months 13 days | 6 years 9 months 25 days | ||||
Aggregate Intrinsic Value | ||||||
Outstanding | $ 31,070 | $ 109,054 | ||||
Information about the stock option plan | ||||||
Number of Options, vested and expected to vest (in shares) | 4,829,454 | |||||
Number of Options, exercisable (in shares) | 3,160,857 | |||||
Weighted-Average Exercise Price Per Share, vested and expected to vest (in dollars per share) | $ 40.41 | |||||
Weighted-Average Exercise Price Per Share, exercisable (in dollars per share) | $ 34.92 | |||||
Weighted-Average Remaining Contractual Term, vested and expected to vest | 6 years 7 months 13 days | |||||
Weighted-Average Remaining Contractual Term, exercisable | 5 years 7 months 2 days | |||||
Aggregate Intrinsic Value, vested and expected to vest (in dollars) | $ 31,070 | |||||
Aggregate Intrinsic Value, exercisable (in dollars) | 28,706 | |||||
Stock options | ||||||
Stock compensation | ||||||
Stock-based compensation expense | 5,600 | $ 6,400 | ||||
Unrecognized stock-based compensation expense, options | $ 51,800 | |||||
Weighted-average period over which remaining unrecognized compensation cost will be recognized | 2 years 7 months 6 days | |||||
RSUs | ||||||
Stock compensation | ||||||
Stock-based compensation expense | $ 1,500 | $ 200 | ||||
Unrecognized stock-based compensation expense, RSUs | $ 17,300 | |||||
Weighted-average period over which remaining unrecognized compensation cost will be recognized | 3 years 6 months | |||||
Number of Options | ||||||
Outstanding and unvested at the beginning of period (in shares) | 245,966 | |||||
Granted (in shares) | 177,824 | |||||
Forfeited or expired (in shares) | (23,939) | |||||
Vested (in shares) | (10,089) | |||||
Outstanding and unvested at the ending of period (in shares) | 389,762 | 245,966 | ||||
Weighted-Average Exercise Price Per Share | ||||||
Outstanding and unvested at the beginning of period (in dollars per share) | $ 44.45 | |||||
Granted (in dollars per share) | 59.93 | |||||
Forfeited or expired (in dollars per share) | 43.03 | |||||
Vested (in dollars per share) | 53.60 | |||||
Outstanding and unvested at the at the end of the period (in dollars per share) | $ 51.36 | $ 44.45 | ||||
2017 Inducement Equity Plan | ||||||
Stock compensation | ||||||
Number of commons stock shares available for issuance | 750,000 | |||||
Additional shares authorized | 400,000 | |||||
2013 Stock Option and Incentive Plan | ||||||
Stock compensation | ||||||
Authorized increase as percentage of outstanding shares | 2.50% | |||||
2013 Stock Option and Incentive Plan | Maximum | ||||||
Stock compensation | ||||||
Number of commons stock shares available for issuance | 2,975,000 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases | ||
Increase in right-of-use assets | $ 4,000 | |
Increase in operating lease liabilities | 4,100 | |
Operating lease costs | 200 | $ 100 |
Cash paid for the amounts included in the measurement of lease liabilities | $ 200 | $ 100 |
Weighted-average remaining lease term of operating leases | 3 years | |
Weighted average discount rate | 4.00% | |
Right of use assets obtained in exchange for lease obligations | $ 0 | |
Future maturities of operating lease liabilities | ||
2020 | 1,589 | |
2021 | 1,975 | |
2022 | 1,928 | |
2023 | 471 | |
Total lease payments | 5,963 | |
Less imputed interest | 331 | |
Total | $ 5,632 | |
Principal executive offices | ||
Leases | ||
Operating lease term | 5 years | |
Automobile leases and IT equipment leases | ||
Leases | ||
Operating lease term | 3 years |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Provision for income taxes | ||
Provision for income taxes | $ 0 | $ 0 |
Net Income (Loss) Per Common _2
Net Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net Income (Loss) Per Common Share | ||
Net income (loss) | $ (78,249) | $ 87,379 |
Weighted average shares - basic | 27,519,229 | 26,842,785 |
Dilutive shares | 1,606,982 | |
Weighted average shares - diluted | 27,519,229 | 28,449,767 |
Net income (loss) per common share - basic | $ (2.84) | $ 3.26 |
Net income (loss) per common share - diluted | $ (2.84) | $ 3.07 |
Total potentially dilutive shares | 5,219,216 | 2,322,387 |
Warrants for common stock | ||
Net Income (Loss) Per Common Share | ||
Dilutive shares | 5,443 | |
Stock options | ||
Net Income (Loss) Per Common Share | ||
Dilutive shares | 1,601,288 | |
Total potentially dilutive shares | 4,829,454 | 2,288,037 |
Unvested RSUs | ||
Net Income (Loss) Per Common Share | ||
Dilutive shares | 251 | |
Total potentially dilutive shares | 389,762 | 34,350 |
Statements of Cash Flows (Detai
Statements of Cash Flows (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Statements of Cash Flows. | ||||
Cash and cash equivalents | $ 149,386 | $ 166,130 | $ 174,836 | |
Restricted cash | 928 | 928 | 1,193 | |
Total cash and cash equivalents and restricted cash shown on the Condensed Statements of Cash Flows | $ 150,314 | $ 167,058 | $ 176,029 | $ 36,973 |
Subsequent Events (Details)
Subsequent Events (Details) - Collaborative Arrangement - Otsuka Pharmaceutical Co, Ltd. - Exclusive Development and Commercialization Rights to NEXLETOL and NEXLIZET Tablets $ in Millions | Apr. 17, 2020USD ($) |
Forecast | |
Subsequent Events | |
Costs by collaborator for clinical development | $ 100 |
Subsequent events | |
Subsequent Events | |
Upfront cash payment | 60 |
Potential additional future payments | $ 450 |
Subsequent events | Minimum | |
Subsequent Events | |
Percentage of royalties to be received on the net sales | 15.00% |
Subsequent events | Maximum | |
Subsequent Events | |
Percentage of royalties to be received on the net sales | 30.00% |