-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Amhgwq5WzEToD1awSFinQGiIkzBHnZy93kTtf5HqzX7I4PWEmlJahrYMPn/dZv8L PHF5WV8TYwHsIa190AgKKQ== 0000950132-00-000736.txt : 20001106 0000950132-00-000736.hdr.sgml : 20001106 ACCESSION NUMBER: 0000950132-00-000736 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000921 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESPERION THERAPEUTICS INC/MI CENTRAL INDEX KEY: 0001066745 STANDARD INDUSTRIAL CLASSIFICATION: 2834 IRS NUMBER: 383419139 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-31004 FILM NUMBER: 726482 BUSINESS ADDRESS: STREET 1: 3621 S STATE STREET 695KMS PLACE STREET 2: 734-332-0506 CITY: ANN ARBOR STATE: MI ZIP: 48108 MAIL ADDRESS: STREET 1: 3621 STATE STREET STREET 2: 695 KMS PLACE CITY: ANN ARBOR STATE: MI ZIP: 48108 10-Q 1 0001.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal period ended: June 30, 2000 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number: 001-16033 ESPERION THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 2834 38-3419139 (State of incorporation) (Primary Standard Industrial (IRS Employer Classification Code No.) Identification No.) 3621 S. State Street, 695 KMS Place Ann Arbor, MI 48108 (734) 332-0506 (Address of principal executive offices, including zip code, and telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [_] Yes [X] No The number of outstanding shares of the Registrant's common stock, as of September 15, 2000, was 24,944,559. ESPERION THERAPEUTICS, INC. FORM 10-Q TABLE OF CONTENTS
Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999................................................................. 3 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2000 and 1999 and the period from inception to June 30, 2000............................................................ 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 and the period from inception to June 30, 2000.... 5 Notes to Condensed Consolidated Financial Statements......................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................... 9 Item 3. Quantitative and Qualitative Disclosures about Market Risk................... 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings............................................................ 14 Item 2. Changes in Securities and Use of Proceeds.................................... 14 Item 3. Defaults Upon Senior Securities.............................................. 15 Item 4. Submission of Matters to a Vote of Security Holders.......................... 15 Item 5. Other Information............................................................ 15 Item 6. Exhibits and Reports on Form 8-K............................................. 15 SIGNATURES.............................................................................. 16 INDEX TO EXHIBITS....................................................................... 17
2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements ESPERION THERAPEUTICS, INC. AND SUBSIDIARY (A Company in the Development Stage) CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, in thousands 2000 1999 - - ---------------------------------------------------------------------------------------------------------------- Assets: (Unaudited) Current assets: Cash and cash equivalents $ 22,685 $ 5,904 Prepaid expenses and other 399 139 - - ---------------------------------------------------------------------------------------------------------------- Total current assets 23,084 6,043 - - ---------------------------------------------------------------------------------------------------------------- Furniture and equipment, net 2,138 1,956 Deposits and other assets 655 0 - - ---------------------------------------------------------------------------------------------------------------- Total assets $ 25,877 $ 7,999 ================================================================================================================ Liabilities and Stockholders' Equity: Current liabilities: Current portion of long-term debt $ 495 $ 495 Accounts payable 1,143 1,425 Accrued liabilities 3,732 980 - - ---------------------------------------------------------------------------------------------------------------- Total current liabilities 5,370 2,900 - - ---------------------------------------------------------------------------------------------------------------- Long-term debt, less current portion 1,975 2,284 Stockholders' equity: Convertible preferred stock 219 105 Common stock 2 2 Additional paid-in capital 45,712 16,467 Notes receivable (91) (106) Accumulated deficit during the development stage (24,020) (12,813) Deferred stock compensation (3,282) (838) Accumulated other comprehensive loss (8) (2) - - ---------------------------------------------------------------------------------------------------------------- Total stockholders' equity 18,532 2,815 - - ---------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 25,877 $ 7,999 ================================================================================================================
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 ESPERION THERAPEUTICS, INC. AND SUBSIDIARY (A Company in the Development Stage) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended Inception to June 30, June 30, June 30, ------------------------------------------------------- in thousands except share and per share data 2000 1999 2000 1999 2000 - - --------------------------------------------------------------------------------------------------------------------------- Operating expenses: Research and development $ 6,103 $ 2,422 $ 10,166 $ 3,692 $ 20,574 General and administrative 720 563 1,726 878 4,707 - - --------------------------------------------------------------------------------------------------------------------------- Total operating expenses 6,823 2,985 11,892 4,570 25,281 - - --------------------------------------------------------------------------------------------------------------------------- Operating loss (6,823) (2,985) (11,892) (4,570) (25,281) Other income, net 309 99 685 234 1,261 - - --------------------------------------------------------------------------------------------------------------------------- Loss before income taxes (6,514) (2,886) (11,207) (4,336) (24,020) Provision for income taxes 0 0 0 0 0 - - --------------------------------------------------------------------------------------------------------------------------- Net loss (6,514) (2,886) (11,207) (4,336) (24,020) Beneficial conversion feature on preferred stock 0 0 (22,870) 0 (22,870) - - --------------------------------------------------------------------------------------------------------------------------- Net loss attributable to common stockholders ($6,514) ($2,886) ($34,077) ($4,336) ($46,890) - - --------------------------------------------------------------------------------------------------------------------------- Basic and diluted net loss per common share ($2.95) ($1.68) ($16.28) ($2.53) - - ------------------------------------------------------------------------------------------------------------- Weighted average common shares 2,208,721 1,721,797 2,093,361 1,713,448 - - ------------------------------------------------------------------------------------------------------------- Pro forma basic and diluted net loss per share ($0.36) ($0.31) ($1.96) ($0.47) - - ------------------------------------------------------------------------------------------------------------- Pro forma weighted average common shares 18,023,681 9,308,041 17,383,060 9,299,692 - - -------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 ESPERION THERAPEUTICS, INC. AND SUBSIDIARY (A Company in the Development Stage) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended Inception to June 30, June 30, ----------------------------- in thousands 2000 1999 2000 - - ------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net loss ($11,207) ($4,336) ($24,020) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 328 143 799 Amortization of deferred stock compensation 506 140 785 Stock-based compensation expense 413 0 688 Decrease in notes receivable 15 7 34 Changes in assets and liabilities: Prepaid expenses and other (314) 64 (452) Other assets (5) (20) (4) Accounts payable (262) 923 1,133 Accrued liabilities 1,638 379 2,371 - - ------------------------------------------------------------------------------------------------------------------ Net cash used in operating activities (8,888) (2,700) (18,666) - - ------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Purchases of furniture and equipment (510) (944) (2,937) Deposit on furniture and equipment (450) 0 (450) - - ------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities (960) (944) (3,387) - - ------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Net proceeds from issuance of convertible preferred stock 26,871 0 42,200 Proceeds from the issuance of common stock 50 0 52 Proceeds from long-term debt 0 1,486 3,027 Repayments of long-term debt (248) 0 (496) - - ------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities 26,673 1,486 44,783 - - ------------------------------------------------------------------------------------------------------------------ Effect of exchange rate changes on cash (44) (20) (45) - - ------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 16,781 (2,178) 22,685 Cash and cash equivalents at beginning of period 5,904 12,541 0 - - ------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 22,685 $ 10,363 $ 22,685 - - ------------------------------------------------------------------------------------------------------------------ Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 142 $ 0 Income taxes $ 0 $ 0 - - -------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 ESPERION THERAPEUTICS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) - Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Esperion Therapeutics, Inc. ("Esperion" or the "Company") and its subsidiary, and have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The Company believes that all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation, have been included. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Form S-1. Operating results for the three and six month periods ended June 30, 2000 and 1999 are not necessarily indicative of the results that may be expected for the full year. (2) - Initial Public Offering of Common Stock In August 2000, the Company completed an initial public offering of its stock, which resulted in the issuance of 6,000,000 shares of common stock at $9.00 per share. In September 2000, an additional 900,000 shares were sold by the Company at $9.00 per share to cover the underwriters' over-allotment. (3) - Comprehensive Loss Comprehensive loss is the total of net loss and all other non-owner changes in equity. Total comprehensive loss was $6,518,000 and $2,881,000 for the three month periods ended June 30, 2000 and 1999, respectively, and $11,213,000 and $4,330,000 for the six month periods ended June 30, 2000 and 1999, respectively. The difference between net loss, as reported in the accompanying condensed consolidated statements of operations, and comprehensive loss is the foreign currency translation adjustment for the respective periods. (4) - Basic, Diluted and Pro Forma Loss per Share Basic and diluted loss per share amounts have been calculated using the weighted average number of shares of common stock outstanding during the respective periods. In all periods presented, options for the purchase of common stock were not included in the calculation of diluted loss per share as doing so would have been anti-dilutive. 6 The following table presents the calculation of pro forma basic and diluted net loss per share:
Three Months Ended Six Months Ended June 30, June 30, ----------------------------- ------------------------------ 2000 1999 2000 1999 ----------------------------- ------------------------------ Net loss attributable to common stockholders........... $(6,514,000) $(2,886,000) $(34,077,000) $(4,336,000) ============================= ============================== Shares used in computing basic and diluted net loss per share............................................. 2,208,721 1,721,797 2,093,361 1,713,448 Pro forma adjustment to reflect assumed conversion of Series A and Series B preferred stock.............. 7,586,244 7,586,244 7,586,244 7,586,244 Pro forma adjustment to reflect assumed conversion of Series C and Series D preferred stock.............. 8,228,716 -- 7,703,455 -- ----------------------------- ------------------------------ Shares used in computing pro forma basic and diluted net loss per share.................................... 18,023,681 9,308,041 17,383,060 9,299,692 ============================= ============================== Pro forma basic and diluted net loss per share......... $ (0.36) $ (0.31) $ (1.96) $ (0.47) ============================= ==============================
Series C and Series D Preferred Stock In accordance with EITF 98-5, the Company recorded approximately $22.9 million relating to the beneficial conversion feature of the Series C preferred stock and Series D preferred stock in the first quarter of fiscal 2000 through equal and offsetting adjustments to additional paid-in capital with no net impact on stockholders' equity, as the preferred stock was convertible immediately on the date of issuance. The beneficial conversion feature was considered in the determination of the Company's loss per common share amounts in the applicable periods. (5) - Commitments and Contingencies Legal Proceeding On March 22, 2000, Talaria Therapeutics, Inc. filed a lawsuit, in which the Company was one of several named defendants, regarding intellectual property and other matters. In this lawsuit, Talaria alleges, among other things, that a patent application that the Company sublicenses improperly incorporates within it confidential information belonging to the person named as the investor in certain patents. In August 2000, the Company entered into a non-binding letter of intent providing for the acquisition of Talaria (see Note 7). The acquisition, if completed, would resolve such litigation and remove the uncertainty about the patent application that the Company sublicenses. The completion of the acquisition of Talaria is subject to certain closing conditions. If the acquisition is not completed, the Company is prepared to defend this litigation in court. At this time, the Company is not able to determine with any certainty the potential outcome of this action or the potential liability, if any, and as such, no reserve has been recorded in the accompanying condensed consolidated balance sheets at June 30, 2000. Contingent repurchase of stock The Company may be required to repurchase approximately 47,000 shares of common stock that was sold to certain employees and others under the Company's directed share program as part of the initial public offering (see Note 2). The Company believes that the maximum liability arising from this repurchase would be approximately $423,000 plus interest. A liability has not been recorded in the financial statements, as management believes that the potential repurchase of these shares is not likely. 7 (6) - Reverse Stock Split The Company effected a 0.7225-for-1 reverse stock split of all outstanding common stock and stock options as of March 24, 2000. All references to the number of shares and per share amounts have been retroactively restated to reflect this reverse stock split. (7) - Subsequent Events In August 2000, the Company entered into a non-binding letter of intent to acquire Talaria Therapeutics, Inc. by way of a merger. The letter of intent provides for the exchange of all of the outstanding shares of stock of Talaria for 813,008 shares of our common stock. The letter of intent also provides for additional payments to Talaria stockholders of up to $6.25 million in cash or common stock upon the achievement of four future development milestones. The milestone payments would become due upon the enrollment of the first patient in certain clinical trials and each of the filing and approval of a new drug application in the United States. These milestones would increase the amount of the initial purchase price in the period when the milestone is achieved. The letter of intent further provides for deferred contingent payments in cash or common stock due to Talaria stockholders based on future net sales of the product in North America, as defined in the letter of intent. The deferred contingent payments would be calculated at a rate of approximately 6% of such net sales or 25% of any sublicensing royalties that the Company receives based upon such net sales. Both the milestone payments and the deferred contingent payments are subject to a combined maximum aggregate amount of $20.0 million. These deferred contingent payments would be included in cost of sales in the period when the respective sales are recognized. The acquisition is subject to the negotiation of a definitive merger agreement and related documents, which would include customary closing conditions, including approval by each company's board of directors and Talaria's stockholders. The acquisition, if completed, would be accounted for under the purchase method of accounting. The purchase price would be allocated to both tangible and intangible assets. As a result of this allocation, the Company expects to write- off approximately $4.0 million of acquired in-process research and development. Any remaining purchase price would be allocated to goodwill and amortized over a period of five years. The final allocation would be based on an independent appraisal of the fair values on the closing date. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion provides an analysis of the Company's financial condition and results of operations, and should be read in conjunction with the Company's consolidated financial statements and the notes included in Item 1 of this Form 10-Q. Forward-Looking Information is Subject to Risk and Uncertainty The following Management's Discussion and Analysis of Financial Condition and Results of Operations as well as information contained elsewhere in this report contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements concerning certain costs and operating expense levels, the level of other income, the Company's liquidity and capital needs, various business environment and trend information, completion of clinical trials, the Company's product candidates, research and development, manufacturing, sales, marketing and commercialization of potential products, and the potential acquisition of Talaria Therapeutics, Inc. When used in this report, we intend the words "may," "believe," "anticipate," "planned," "expect," "require," "intend," "assume" and similar words to identify "forward-looking statements." Our forward-looking statements involve uncertainties and other factors that may cause our actual results, performance or achievements, to be far different from that suggested by our forward-looking statements. These factors include, but are not limited to, risks associated with the development of our product candidates, including regulatory approval; dependence on clinical research organizations, license arrangements and other strategic relationships; dependence on patents and proprietary rights; procurement, maintenance, enforcement and defense of its patents and proprietary rights; risks related to manufacturing; risks related to the ability to consummate the potential acquisition of Talaria; risks associated with the timing and acceptance of new products by the Company or its competitors; competitive conditions in the industry; business cycles affecting the markets in which the Company's products are sold; extraordinary events, such as litigation; risks inherent in seeking and consummating acquisitions, including the diversion of management attention to the assimilation of the operations and personnel of the acquired business; fluctuations in foreign exchange rates; and economic conditions generally or in various geographic areas. All of the foregoing factors are difficult to forecast. The future operating results of the Company may fluctuate materially as a result of these and other risk factors detailed from time to time in the Company's Securities and Exchange Commission reports and detailed in the Company's Registration Statement on Form S-1, as amended (Registration No. 333- 31032), originally filed with the Securities and Exchange Commission on February 24, 2000. Accordingly, the Company believes that period-to-period comparisons of its results of operations are not necessarily meaningful and should not be relied upon as an indication of future performance. It is likely that, in some future quarters, the Company's operating results will be below the expectations of stock market analysts and investors. In such an event, the price of the Company's common stock would likely be materially adversely affected. You should not place undue reliance on our forward-looking statements. We do not intend to update any of these factors or to publicly announce the results of any revisions to any of these forward-looking statements. Overview Background We have devoted substantially all of our resources since we began our operations in May 1998 to the research and development of pharmaceutical product candidates for cardiovascular disease. We are a development stage pharmaceutical company and have not generated any revenues from product sales. We have not been profitable and have incurred a cumulative net loss of approximately $24.0 million from inception through June 30, 2000. These losses have resulted principally from costs incurred in research and development activities, and general and administrative expenses. We expect to incur significant additional operating losses for at least the next several years and until such time as we generate sufficient revenue to offset expenses. Research and development costs relating to product candidates will continue to increase. Manufacturing, sales and marketing costs will increase as we prepare for the commercialization of our products. 9 Recent Development In August 2000, we entered into a non-binding letter of intent providing for our acquisition of Talaria Therapeutics, Inc. by way of a merger. The proposed letter of intent provides for the exchange of all of the outstanding shares of stock of Talaria for 813,008 shares of our common stock. The letter of intent also provides for additional payments by us to Talaria stockholders of up to $6.25 million in cash or common stock upon the achievement of four future development milestones, of which $750,000 may become due within the next twelve months. The milestone payments would become due upon the enrollment of the first patient in certain future clinical trials and each of the filing and approval of a new drug application in the United States. The letter of intent further provides for deferred contingent payments in cash or common stock payable to Talaria stockholders based on net sales of large unilamellar vesicles, or LUVs, in North America, as defined in the letter of intent. We expect that the deferred contingent payments would be calculated at a rate of approximately 6% of such net sales, or 25% of sublicensing royalties that we would receive based upon such net sales. Both the milestone payments and the deferred contingent payments are subject to a combined maximum aggregate amount of $20.0 million. The acquisition, if completed, would be accounted for under the purchase method of accounting. The initial purchase price for amounts due at closing would be allocated to both tangible and intangible assets. As a result of this initial estimated allocation, we expect to write-off approximately $4.0 million of acquired in-process research and development. Any remaining purchase price would be allocated to goodwill and amortized over a five-year period. The final allocation would be based on an independent appraisal of the fair values on the closing date. We expect that we would account for the milestone payments as increases to the initial purchase price in the period when the milestone is achieved and we would include these additional amounts as part of goodwill. We expect to account for any deferred contingent payments relating to sales of the LUV product as cost of sales in the period when the related sales are recognized. We expect to allocate $4.0 million of the initial purchase price to acquired in-process research and development based on the assumption that the development of LUVs has not yet reached technological feasibility, and that no alternative future uses have been identified. Significant further investment is required to complete the development of the acquired technology, including completion of clinical trials, manufacturing scale-up and successful regulatory approvals. Talaria had spent approximately $3.2 million on the development of the in- process project since its inception in 1998; the patent holders spent additional amounts on scientific research prior to 1998. We expect to spend an additional $20.0 million in third party costs over all phases of the project prior to commercialization. Of these remaining costs, approximately $15.0 million would relate to a Phase III clinical trial which is expected to commence after the Phase II clinical trials are completed, but not sooner than 2002. Our expectations with respect to these additional costs, adjustments and periods are preliminary and therefore subject to substantial sequential adjustments. Results of Operations Operating Expenses
Three Months Ended June 30, Six Months Ended June 30, --------------------------------- -------------------------------- dollars in thousands 2000 1999 % Change 2000 1999 % Change - - ---------------------------------------------------------------------------------------------------------- Research and development $6,103 $2,422 152.0% $10,166 $3,692 175.4% % of total 89.4% 81.1% 85.5% 80.8% General and administrative $ 720 $ 563 27.9% $ 1,726 $ 878 96.6% % of total 10.6% 18.9% 14.5% 19.2%
10 Three Months Ended June 30, 2000 Research and Development Expenses. Research and development expenses increased to approximately $6.1 million for the three months ended June 30, 2000 compared to approximately $2.4 million for the three months ended June 30, 1999. This increase is primarily due to the costs associated with developing our product candidates, including new product candidates discovered or in-licensed over the past year, as well as higher personnel costs. General and Administrative Expenses. General and administrative expenses increased to approximately $720,000 for the three months ended June 30, 2000 compared to approximately $563,000 for the three months ended June 30, 1999. This increase is primarily due to higher personnel costs to support the growth in the operations. Other Income (Expense). Interest income increased to approximately $313,000 for the three months ended June 30, 2000 compared to approximately $99,000 for the three months ended June 30, 1999. The increase is attributable to higher levels of cash and cash equivalents available for investment in 2000. Interest expense for the three months ended June 30, 2000 and 1999 was approximately $48,000 and $0, respectively, and represents interest incurred on an equipment financing facility and a special project loan in 2000. During the three months ended June 30, 2000, we recorded approximately $44,000 of foreign currency transaction gains on transactions denominated in various currencies of European countries. Net Loss. The net loss was approximately $6.5 million for the three months ended June 30, 2000 compared to approximately $2.9 million for the three months ended June 30, 1999. The increase reflects increases in research and development and general and administrative expenses, offset in part by the increase in interest income. Six Months Ended June 30, 2000 Research and Development Expenses. Research and development expenses increased to approximately $10.2 million for the six months ended June 30, 2000 compared to approximately $3.7 million for the six months ended June 30, 1999. This increase is primarily due to the costs associated with developing our product candidates, including new product candidates discovered or in-licensed over the past year, as well as higher personnel costs. General and Administrative Expenses. General and administrative expenses increased to approximately $1.7 million for the six months ended June 30, 2000 compared to approximately $878,000 for the six months ended June 30, 1999. This increase is primarily due to increased general and administrative personnel and facility costs as well as a $413,000 non-cash compensation charge related to the issuance of series C preferred stock in exchange for services rendered by an employee and a director. Other Income (Expense). Interest income increased to approximately $665,000 for the six months ended June 30, 2000 compared to approximately $235,000 for the six months ended June 30, 1999. The increase is attributable to higher levels of cash and cash equivalents available for investment in 2000. Interest expense for the same periods was approximately $177,000 and $1,000 and represents interest incurred on an equipment financing facility and a special project loan in 2000. During the six months ended June 30, 2000, we recorded approximately $197,000 of foreign currency transaction gains on transactions denominated in various currencies of European countries. Net Loss. The net loss was approximately $11.2 million for the six months ended June 30, 2000 compared to approximately $4.3 million for the six months ended June 30, 1999. The increase reflects increases in research and development and general and administrative expenses, offset in part by the increase in interest income. Net Loss Attributable to Common Stockholders. The net loss attributable to common stockholders for the six months ended June 30, 2000 includes a one-time $22.9 million charge related to the beneficial conversion feature on the series C and series D convertible preferred stock. The total of the non-cash beneficial conversion feature was reflected through equal and offsetting adjustments to additional paid-in-capital with no net impact on stockholders' equity. The beneficial conversion feature was considered in the determination of our loss per common share amounts. 11 Liquidity and Capital Resources In August 2000, the Company completed an initial public offering of its stock, which resulted in the issuance of 6,000,000 shares of common stock at $9.00 per share. In September 2000, an additional 900,000 shares were sold by the Company at $9.00 per share to cover the underwriters' over-allotment. Total proceeds to the Company from the offering were approximately $57.8 million, after deducting the underwriting discount. As of June 30, 2000, the Company had cash and cash equivalents of approximately $22.7 million, an increase of approximately $16.8 million from December 31, 1999 resulting primarily from the issuance of series C and series D preferred stock financings in January 2000 and February 2000, respectively, offset by approximately $8.9 million in cash used to fund operations. We believe that our current cash position, available borrowings under our credit facilities and the proceeds of the initial public offering will be sufficient to fund our operations and capital expenditures until at least the end of 2002. During the six months ended June 30, 2000 and 1999, net cash used in operating activities was approximately $8.9 and $2.7 million, respectively. This cash was used to fund our net losses for the periods, adjusted for non-cash expenses and changes in operating assets and liabilities. Net cash used in investing activities for the six months ended June 30, 2000 and 1999 was $960,000 and $944,000, respectively, primarily the result of the acquisition of laboratory equipment, furniture and fixtures and office equipment. Net cash proceeds from financing activities were $26.7 million and $1.5 million for the six months ended June 30, 2000 and 1999, respectively. The net cash proceeds from financing activities for the six months ended June 30, 2000 were primarily from the issuance of preferred stock. The net cash proceeds from financing activities during the six months ended June 30, 1999 were from borrowings on an equipment loan. We anticipate that our capital expenditures will be approximately $2.5 million in 2000. These expenditures include an agreement we have entered into with a scientific instrument manufacturer to purchase a specialized piece of equipment for $1.0 million. We expect delivery in the second half of 2000. As of June 30, 2000, we had approximately $991,000 outstanding under a credit facility with a U.S. bank. This credit facility was used to finance purchases of equipment. Borrowings under the facility bear interest at the bank's prime rate plus 1.0%. We also have a credit facility with a Swedish entity totaling 50 million Swedish kronor (approximately $1.5 million of which was outstanding as of June 30, 2000) that may only be used to finance the development of our AIM product candidate. If a related product is not developed or does not succeed in the market, our obligation to repay the loan may be forgiven. Borrowings under the loan facility bear interest at 17.0% of which 9.5% is payable quarterly. The remaining 7.5% of interest together with principal are payable in five equal annual installments starting December 2004. We have signed a commitment letter with a U.S. lender for a credit facility that may be used to finance past and future purchases of equipment. If final loan documents are signed relating to this facility, the aggregate borrowings available under the facility would be $2.5 million. This facility is subject to completion of the final loan documents and approval from the lender. We lease our corporate and research and development facilities under operating leases expiring at various times through June 2002. We may extend these leases for additional periods. Minimum annual payments under these leases are approximately $491,000 as of June 30, 2000. We expect that our operating expenses and capital expenditures will increase in future periods. We also intend to hire additional research and development, clinical testing and administrative staff. Our capital expenditure requirements will depend on numerous factors, including the progress of our research and development programs, the time required to file and process regulatory approval applications, the development of commercial manufacturing capability, the ability to obtain additional licensing arrangements, and the demand for our product candidates, if and when approved by the FDA or other regulatory authorities. 12 Income Taxes As of June 30, 2000, we had net operating loss carryforwards of approximately $20.9 million. These net operating loss carryforwards expire beginning in 2018. Additionally, utilization of net operating loss carryforwards may be limited under Section 382 of the Internal Revenue Code. These and other deferred income tax assets are fully reserved by a valuation allowance as management has determined that it is more likely than not that the deferred tax assets will not be realized. Employees As of June 30, 2000, we had 47 employees. Of these employees, 39 were engaged in research, preclinical and clinical development, regulatory affairs, intellectual property activities, and/or manufacturing activities and 8 were engaged in finance and general administrative activities. Item 3. Quantitative and Qualitative Disclosures about Market Risk Our exposure to market risk for changes in interest rates relates primarily to the increase or decrease in the amount of interest income we can earn on our investment portfolio and on the increase or decrease in the amount of interest expense we must pay with respect to our various outstanding debt instruments. Under our current policies, we do not use interest rate derivative instruments to manage our exposure to interest rate changes. We ensure the safety and preservation of our invested principal funds by limiting default risks, market risk and reinvestment risk. We mitigate default risk by investing in investment grade securities. A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not materially affect the fair value of our interest sensitive financial instruments at June 30, 2000. Declines in interest rates over time will, however, reduce our interest income while increases in interest rates over time will increase our interest expense. 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings On March 22, 2000, Talaria filed a lawsuit against us and Inex Pharmaceuticals Corp., or Inex, the University of British Columbia, or UBC, and the two inventors named on patent applications we sub-licensed from Inex. One of these inventors is now employed by us. One of the allegations in the lawsuit, which was filed in the United States District Court for the Eastern District of Virginia, is the improper incorporation into a UBC patent application of certain confidential information of Dr. Williams. This UBC patent application is exclusively licensed to Inex and sublicensed to us. In addition to seeking damages, Talaria is asking to be named as the owner or co-owner of the UBC patent application. The parties to the lawsuit have agreed that UBC would take appropriate action in the United States Patent and Trademark Office to prevent issuance of the UBC patent application as a patent until the court had an opportunity to decide certain motions. These motions include one filed by Talaria for a preliminary injunction that would have UBC withdraw the UBC patent applications pending a full trial of the lawsuit or prevent UBC from prosecuting the patent applications. In August 2000, the Company entered into a non-binding letter of intent providing for the acquisition of Talaria. The acquisition, if completed, would resolve such litigation and remove the uncertainty about the patent application that the Company sublicenses. The completion of the acquisition of Talaria is subject to certain closing conditions. If the acquisition is not completed, the Company is prepared to defend this litigation in court. No assurance can be given that any acquisition of Talaria, or any settlement of litigation, can be successfully completed. While we believe that there are valid defenses to Talaria's claims as well as certain indemnification rights against Inex, any such defense would be expensive and would divert management's attention, and there can be no assurances as to the ultimate outcome. Item 2. Changes in Securities and Use of Proceeds On August 10, 2000, the Company consummated its initial public offering (the "Offering") of its common stock, .001 par value (the "Common Stock") based on the Registration Statement on Form S-1, as amended, relating to this offering (Registration No. 333-31032), which was declared effective on August 9, 2000. Robertson Stephens, Chase H&Q and U.S. Bancorp Piper Jaffray were the managing underwriters of the Offering. The Offering terminated on September 8, 2000 upon the sale of all shares registered. The number of shares registered, the aggregate price of the offering amount registered, the amount sold and the aggregate offering price of the amount sold by the Company in the Offering were as follows:
- - -------------------------------------------------------------------------------------------------------------------- Shares Aggregate Price Aggregate Closing Date Registered Registered Amount Sold Price Sold - - -------------------------------------------------------------------------------------------------------------------- Primary Offering August 15, 2000 6,000,000 $54,000,000 6,000,000 $54,000,000 - - -------------------------------------------------------------------------------------------------------------------- Over-allotment Offering September 8, 2000 900,000 $ 8,100,000 900,000 $ 8,100,000 - - --------------------------------------------------------------------------------------------------------------------
As of the closing of the Offering on September 8, 2000, the Company had incurred the following expenses, none of which were direct or indirect payments to directors, officers, general partners of the Company or their associates or to persons owning 10% of more of any class of equity securities of the Company or to affiliates of the Company:
- - -------------------------------------------------------------------------------------------------------------------- Underwriting Discounts and Underwriters' Other Total Commissions Finders Fees Expenses Expenses (1) Expenses (1) - - -------------------------------------------------------------------------------------------------------------------- Primary Offering $3,780,000 $0 $0 $1,800,000 $5,580,000 - - -------------------------------------------------------------------------------------------------------------------- Over-allotment Offering $ 567,000 $0 $0 $ 100,000 $ 667,000 - - --------------------------------------------------------------------------------------------------------------------
(1) Estimated. 14 The net offering proceeds to the Company, from the Offering, after deducting the foregoing discounts, commissions, fees and expenses were $55,853,000. From August 15, 2000 through the date of this filing, the Company invested the net proceeds from the Offering in cash equivalents and short-term investments. Pursuant to our 1998 Stock Option Plan, during the three months ended June 30, 2000, we have granted options to purchase a total of 23,837 shares of common stock. During the three months ended June 30, 2000, options to purchase a total of 7,768 shares of common stock were exercised. In granting the options and selling the underlying securities upon exercises of the options, we are relying upon exemptions from registration set forth in Section 4(2) of the Securities Act of 1933, as amended, and/or Rule 701, Regulation D or Regulation S promulgated thereunder. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Number Exhibit - - ------------------------------------------------------------------------------- (3.3) Fifth Amended and Restated Certificate of Incorporation of the Company. (3.4) Amended and Restated Bylaws of the Company. (27.1) Financial Data Schedule. (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the three months ended June 30, 2000. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: September 20, 2000 ESPERION THERAPEUTICS, INC. (Registrant) By: /s/ Roger S. Newton -------------------------------------------- Roger S. Newton President and Chief Executive Officer (Principal Executive Officer) By: /s/ Timothy M. Mayleben -------------------------------------------- Timothy M. Mayleben Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 16 INDEX TO EXHIBITS Number Exhibit - - -------------------------------------------------------------------------------- (3.3) Fifth Amended and Restated Certificate of Incorporation of the Company. (3.4) Amended and Restated Bylaws of the Company. (27.1) Financial Data Schedule. 17 EX-3.3 2 0002.txt CERTIFICATE OF INCORPORATION EXHIBIT 3.3 FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF ESPERION THERAPEUTICS, INC. ESPERION THERAPEUTICS, INC. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "General Corporation Law"), hereby certifies as follows: FIRST: The name of the Corporation is Esperion Therapeutics, Inc. The Certificate of Incorporation of the Corporation was originally filed with the Secretary of State of the State of Delaware on May 18, 1998 under the name of Metapharma Inc. A Certificate of Correction was filed with the Secretary of State of the State of Delaware on May 22, 1998. A Certificate of Amendment to the Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on June 23, 1998. An Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on July 6, 1998. A Second Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on January 7, 2000. A Third Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on February 18, 2000. Two Certificates of Correction were filed with the Secretary of State of the State of Delaware on May 9, 2000. A Fourth Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on May 9, 2000. SECOND: This Fifth Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation") restates and integrates and further amends the Fourth Amended and Restated Certificate of Incorporation of the Corporation. This Certificate of Incorporation was duly adopted in accordance with the provisions of Sections 242 and 245 and was approved by written consent of the stockholders of the Corporation given in accordance with the provisions of Section 228 of the General Corporation Law (prompt notice of such action having been given to those stockholders who did not consent in writing). THIRD: This Fifth Amended and Restated Certificate of Incorporation shall not become effective upon its filing date, but rather, shall become effective at 10:00 a.m. on August 15, 2000. FOURTH: The text of the Certificate of Incorporation of the Corporation is hereby restated and amended to read in its entirety as follows: ARTICLE I --------- NAME ---- The name of the Corporation is Esperion Therapeutics, Inc. ARTICLE II ---------- REGISTERED AGENT ---------------- The address of the Corporation's registered office in the State of Delaware is 1013 Centre Road, Wilmington, Delaware 19805. The name of its registered agent at such address is Corporation Service Company. ARTICLE III ----------- PURPOSE ------- The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV ---------- CAPITAL STOCK ------------- The Corporation shall have the authority to issue 55,000,000 shares of all classes of stock, consisting of (a) 50,000,000 shares of common stock, par value $.001 per share ("Common Stock"), and (b) 5,000,000 shares of undesignated preferred stock, par value $.01 per share (the "Undesignated Preferred Stock"). The Board of Directors is authorized, subject to limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, voting, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the certificate or certificates establishing any series of Preferred Stock. ARTICLE V --------- BYLAWS ------ In furtherance and not in limitation of the powers conferred upon the Board of Directors by statute, the Board of Directors is expressly authorized to make, alter or repeal the Bylaws of the Corporation, subject to the power of the stockholders to adopt any Bylaws or to amend or repeal any Bylaws adopted, amended or repealed by the Board of Directors. ARTICLE VI ---------- NO ACTION WITHOUT ANNUAL OR SPECIAL MEETING ------------------------------------------- Any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation and may not be affected by any consent in writing by such stockholders. ARTICLE VII CLASSES OF DIRECTORS -------------------- The Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. Each class of directors shall be as nearly equal in number as possible. Each Director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such Director was elected; provided, that each initial Director in Class I shall serve for a term ending on the date of the annual meeting in 2001; each initial Director in Class II shall serve for a term ending on the date of the annual meeting in 2002; and each initial Director in Class III shall serve for a term ending on the date of the annual meeting in 2003; and provided further, that the term of each Director shall be subject to the election and qualification of his successor and to his earlier death, resignation or removal. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the Bylaws. ARTICLE VI ---------- LIMITATION OF LIABILITY ----------------------- No person who is or was a director of this Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for the breach of any fiduciary duty as a director, unless, and only to the extent that, such director is liable (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law is amended to authorize corporate action further limiting or eliminating the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended. No amendment to, repeal or adoption of any provision of this Certificate of Incorporation inconsistent with this ARTICLE VII shall apply to or have any effect on the liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment, repeal or adoption of an inconsistent provision. ARTICLE VIII ------------ INDEMNIFICATION --------------- The Corporation shall indemnify each person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent permitted by Section 145 of the General Corporation Law, as amended. The indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, and such indemnification shall continue as to a person who has ceased to be such a person and shall inure to the benefit of the heirs, executors and administrators of such a person. IN WITNESS WHEREOF, Esperion Therapeutics, Inc. has caused this Fifth Amended and Restated Certificate of Incorporation to be signed by its President and Chief Executive Officer this 11th day of August, 2000. ESPERION THERAPEUTICS, INC. By: /s/ Roger S. Newton ------------------------------------- Roger S. Newton, Ph.D. President and Chief Executive Officer EX-3.4 3 0003.txt BYLAWS OF ESPERION THERAPEUTICS, INC. EXHIBIT 3.4 AMENDED AND RESTATED BYLAWS OF ESPERION THERAPEUTICS, INC. Incorporated under the Laws of the State of Delaware ARTICLE I OFFICERS AND RECORDS SECTION 1.01 Delaware Office. The Corporation shall maintain a registered --------------- office and registered agent within the State of Delaware, which may be changed by the Board of Directors from time to time. The address of the Corporation's principal office in Delaware is: 1013 Centre Road, Wilmington, New Castle County. The name of the registered agent is: Corporation Service Company, Inc. SECTION 1.02 Other Offices. The Corporation may have such other offices, ------------- either within or without the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may from time to time require. SECTION 1.03 Books and Records. The books and records of the Corporation may ----------------- be kept outside the State of Delaware at such place or places as may from time to time be designated by the Board of Directors. ARTICLE II STOCKHOLDERS SECTION 2.01 Annual Meeting. The annual meeting of the stockholders of the -------------- Corporation shall be held on such date and at such place and time as may be fixed by resolution of the Board of Directors. SECTION 2.02 Special Meeting. Subject to the rights of the holders of any --------------- series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation ("Preferred Stock") with respect to such series of Preferred Stock, special meetings of the stockholders may be called only by the Chairman of the Board or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies (the "Whole Board"). SECTION 2.03 Place of Meeting. The Board of Directors or the Chairman of the ---------------- Board, as the case may be, may designate the place of meeting for any annual meeting or for any special meeting of the stockholders called by the Board of Directors or the Chairman of the Board. If no designation is so made, the place of meeting shall be the principal office of the Corporation. SECTION 2.04 Notice of Meeting. Written or printed notice, stating the place, ----------------- day and hour of the meeting and the purpose or purposes for which the meeting is called, shall be delivered by the Corporation not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally or by mail, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation. Such further notice shall be given as may be required by law. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Meetings may be held without notice if all stockholders entitled to vote are present, or if notice is waived by those not present in accordance with Section 6.04 of these Bylaws. Any previously scheduled meeting of the stockholders may be postponed, and (unless the Certificate of Incorporation otherwise provides) any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders. SECTION 2.05 Quorum and Adjournment. Except as otherwise provided by law or by ---------------------- the Certificate of Incorporation, the holders of a majority of the outstanding shares of the Corporation entitled to vote generally in the election of directors (the "Voting Stock"), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. The Chairman of the meeting or a majority of the shares so represented may adjourn the meeting from time to time, whether or not there is such a quorum. No notice of the time and place of adjourned meetings need be given except as required by law. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. SECTION 2.06 Proxies. At all meetings of stockholders, a stockholder may vote ------- by proxy executed in writing (or in such manner prescribed by the General Corporation Law of the State of Delaware) by the stockholder, or by his duly authorized attorney in fact. SECTION 2.07 Notice of Stockholder Business and Nominations. ---------------------------------------------- (A) Annual Meetings of Stockholders. (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may 2 be made at an annual meeting of stockholders (a) pursuant to the Corporation's notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Bylaw, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Bylaw. (2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A) (1) of this Bylaw, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner. (3) Notwithstanding anything in the second sentence of paragraph (A) (2) of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 70 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive 3 offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. (B) Special Meetings of Stockholders. Only such business shall be -------------------------------- conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Bylaw, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Bylaw. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation's notice of meeting, if the stockholder's notice required by paragraph (A) (2) of this Bylaw shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder's notice as described above. (C) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this Bylaw shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Bylaw. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Bylaw and, if any proposed nomination or business is not in compliance with this Bylaw, to declare that such defective proposal or nomination shall be disregarded. (2) For purposes of this Bylaw, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. 4 (3) Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock to elect directors under specified circumstances. SECTION 2.08 Procedure for Election of Directors; Required Vote. Election of -------------------------------------------------- directors at all meetings of the stockholders at which directors are to be elected shall be by ballot, and, subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, a plurality of the votes cast thereat shall elect directors. Except as otherwise provided by law, the Certificate of Incorporation, or these Bylaws, in all matters other than the election of directors, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders. SECTION 2.09 Inspectors of Elections; Opening and Closing the Polls. The Board ----------------------------------------------------- of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the Chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law. The Chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting. SECTION 2.10 No Stockholder Action by Written Consent. Subject to the rights ---------------------------------------- of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation and may not be affected by any consent in writing by such stockholders. ARTICLE III BOARD OF DIRECTORS SECTION 3.01 General Powers. The business and affairs of the Corporation shall -------------- be managed under the direction of the Board of Directors. In addition to the powers and 5 authorities by these Bylaws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders. SECTION 3.02 Number, Tenure and Qualifications. Subject to the rights of the --------------------------------- holders of any series of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Whole Board. The Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. Each class of directors shall be as nearly equal in number as possible. Each Director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such Director was elected; provided, that each initial Director in Class I shall serve for a term ending on the date of the annual meeting in 2001; each initial Director in Class II shall serve for a term ending on the date of the annual meeting in 2002; and each initial Director in Class III shall serve for a term ending on the date of the annual meeting in 2003; and provided further, that the term of each Director shall be subject to the election and qualification of his successor and to his earlier death, resignation or removal. SECTION 3.03 Regular Meetings. A regular meeting of the Board of Directors ---------------- shall be held without other notice than this Bylaw immediately after, and at the same place as, the Annual Meeting of Stockholders. The Board of Directors may, by resolution, provide the time and place for the holding of additional regular meetings without other notice than such resolution. SECTION 3.04 Special Meetings. Special meetings of the Board of Directors ---------------- shall be called at the request of the Chairman of the Board, the President or a majority of the Board of Directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of the meetings. SECTION 3.05 Notice. Notice of any special meeting of directors shall be given ------ to each director at his business or residence in writing by hand delivery, first-class or overnight mail or courier service, telegram or facsimile transmission, or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company or the notice is delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting. If by facsimile transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. If by telephone or by hand delivery, the notice shall be given at least twelve (12) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these Bylaws, as provided under Section 8.1. A meeting may 6 be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 6.4 of these Bylaws. SECTION 3.06 Action by Consent of Board of Directors. Any action required or --------------------------------------- permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. SECTION 3.07 Conference Telephone Meetings. Members of the Board of Directors, ----------------------------- or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. SECTION 3.08 Quorum. Subject to Section 3.9, a whole number of directors equal ------ to at least a majority of the Whole Board shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum. SECTION 3.09 Vacancies. Subject to applicable law and the rights of the --------- holders of any series of Preferred Stock with respect to such series of Preferred Stock, and unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been elected expires and until such director's successor shall have been duly elected and qualified. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director. SECTION 3.10 Executive and Other Committees. The Board of Directors may, by ------------------------------ resolution adopted by a majority of the Whole Board, designate an Executive Committee to exercise, subject to applicable provisions of law, all the powers of the Board in the management of the business and affairs of the Corporation when the Board is not in session, including without limitation the power to declare dividends, to authorize the issuance of the Corporation's capital stock and to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of the State of Delaware, and may, by resolution similarly adopted, designate one or more other committees. The 7 Executive Committee and each such other committee shall consist of two or more directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, other than the Executive Committee (the powers of which are expressly provided for herein), may to the extent permitted by law exercise such powers and shall have such responsibilities as shall be specified in the designating resolution. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board when required. A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 3.5 of these Bylaws. The Board shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. Nothing herein shall be deemed to prevent the Board from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; provided, however, that no such committee shall have or may exercise any authority of the Board. SECTION 3.11 Removal. Subject to the rights of the holders of any series of ------- Preferred Stock with respect to such series of Preferred Stock, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 66 2/3 percent of the voting power of all of the then-outstanding shares of Voting Stock, voting together as a single class. SECTION 3.12 Records. The Board of Directors shall cause to be kept a record ------- containing the minutes of the proceedings of the meetings of the Board and of the stockholders, appropriate stock books and registers and such books of records and accounts as may be necessary for the proper conduct of the business of the Corporation. ARTICLE IV OFFICERS 8 SECTION 4.01 Elected Officers. The elected officers of the Corporation shall ---------------- be a Chairman of the Board of Directors, a Chief Executive Officer, a President, a Secretary, and such other officers (including, without limitation, a Chief Financial Officer) as the Board of Directors from time to time may deem proper. The Chairman of the Board shall be chosen from among the directors. All officers elected by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this ARTICLE IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof. The Board or any committee thereof may from time to time elect, or the Chairman of the Board or President may appoint, such other officers (including one or more Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, and Assistant Controllers) and such agents, as may be necessary or desirable for the conduct of the business of the Corporation. Such other officers and agents shall have such duties and shall hold their offices for such terms as shall be provided in these Bylaws or as may be prescribed by the Board or such committee or by the Chairman of the Board or President, as the case may be. SECTION 4.02 Election and Term of Office. The elected officers of the --------------------------- Corporation shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held after the annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign, but any officer may be removed from office at any time by the affirmative vote of a majority of the Whole Board or, except in the case of an officer or agent elected by the Board, by the Chairman of the Board or President. Such removal shall be without prejudice to the contractual rights, if any, of the person so removed. SECTION 4.03 Chairman of the Board. The Chairman of the Board shall preside at --------------------- all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall be responsible for the general management of the affairs of the Corporation and shall perform all duties incidental to his office which may be required by law and all such other duties as are properly required of him by the Board of Directors. He shall make reports to the Board of Directors and the stockholders, and shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect. The Chairman of the Board may also serve as President, if so elected by the Board. SECTION 4.04 Chief Executive Officer. The Chief Executive Officer shall be the ----------------------- head of the corporation and in the recess of the Board of Directors and the executive committee shall have the general control and management of all the business and affairs of the corporation. He shall also exercise such further powers and perform such other duties as may from time to time be conferred upon or assigned by these Bylaws, the Board of Directors or the executive committee. He shall make annual reports and submit the same to the Board of Directors and also to the shareholders at their annual meeting, showing the condition and the affairs of the corporation. He shall from time to time 9 make such recommendations to the Board of Directors, the executive committee and any other committee as he thinks proper and shall bring before the Board of Directors, the executive committee and any other committee such information as may be required, relating to the business and property of the corporation. SECTION 4.05 President. The President shall act in a general executive --------- capacity and shall assist the Chairman of the Board in the administration and operation of the Corporation's business and general supervision of its policies and affairs. The President shall, in the absence of or because of the inability to act of the Chairman of the Board, perform all duties of the Chairman of the Board and preside at all meetings of stockholders and of the Board of Directors. SECTION 4.06 Vice-Presidents. Each Vice President shall have such powers and --------------- shall perform such duties as shall be assigned to him by the Board of Directors. SECTION 4.07 Secretary. The Secretary shall keep or cause to be kept in one --------- or more books provided for that purpose, the minutes of all meetings of the Board, the committees of the Board and the stockholders; he shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; he shall be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; and he shall see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and in general, he shall perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board, the Chairman of the Board or the President. SECTION 4.08 Removal. Any officer elected, or agent appointed, by the Board of ------- Directors may be removed by the affirmative vote of a majority of the Whole Board whenever, in their judgment, the best interests of the Corporation would be served thereby. Any officer or agent appointed by the Chairman of the Board or the President may be removed by him whenever, in his judgment, the best interests of the Corporation would be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his successor, his death, his resignation or his removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan. 10 SECTION 4.09 Vacancies. A newly created elected office and a vacancy in any --------- elected office because of death, resignation, or removal may be filled by the Board of Directors for the unexpired portion of the term at any meeting of the Board of Directors. Any vacancy in an office appointed by the Chairman of the Board or the President because of death, resignation, or removal may be filled by the Chairman of the Board or the President. ARTICLE V STOCK CERTIFICATES AND TRANSFERS SECTION 5.01 Stock Certificates and Transfers. The interest of each -------------------------------- stockholder of the Corporation shall be evidenced by certificates for shares of stock in such form as the appropriate officers of the Corporation may from time to time prescribe. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney, upon surrender for cancellation of certificates for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. The certificates of stock shall be signed, countersigned and registered in such manner as the Board of Directors may by resolution prescribe, which resolution may permit all or any of the signatures on such certificates to be in facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 5.02 Lost, Stolen or Destroyed Certificates. No certificate for shares -------------------------------------- of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, except on production of such evidence of such loss, destruction or theft and on delivery to the Corporation of a bond of indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors or any financial officer may in its or his discretion require. ARTICLE VI MISCELLANEOUS PROVISIONS SECTION 6.01 Fiscal Year. The fiscal year of the Corporation shall begin on ----------- the first day of January and end on the thirty-first day of December of each year. 11 SECTION 6.02 Dividends. The Board of Directors may from time to time declare, --------- and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation. SECTION 6.03 Seal. The corporate seal shall have inscribed thereon the words ---- "Corporate Seal," the year of incorporation and around the margin thereof the words "Esperion Therapeutics, Inc. - Delaware." SECTION 6.04 Waiver of Notice. Whenever any notice is required to be given to ---------------- any stockholder or director of the Corporation under the provisions of the General Corporation Law of the State of Delaware or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting. SECTION 6.05 Audits. The accounts, books and records of the Corporation shall ------ be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors, and it shall be the duty of the Board of Directors to cause such audit to be done annually. SECTION 6.06 Resignations. Any director or any officer, whether elected or ------------ appointed, may resign at any time by giving written notice of such resignation to the Chairman of the Board, the President, or the Secretary, and such resignation shall be deemed to be effective as of the close of business on the date said notice is received by the Chairman of the Board, the President, or the Secretary, or at such later time as is specified therein. No formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective. SECTION 6.07 Indemnification and Insurance. ----------------------------- (A) Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit, or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said 12 law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in paragraph (C) of this Bylaw, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Bylaw shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the Corporation within 20 days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Bylaw or otherwise. (B) To obtain indemnification under this Bylaw, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification pursuant to the first sentence of this paragraph (B), a determination, if required by applicable law, with respect to the claimant's entitlement thereto shall be made as follows: (1) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (2) if no request is made by the claimant for a determination by Independent Counsel, (i) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (ii) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (iii) if a quorum of Disinterested directors so directs, by the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the claimant, the Independent Counsel shall be selected by the Board of Directors unless there shall have occurred within two years prior to the date of the commencement of the action, suit or proceeding for which indemnification is claimed a "Change of Control" as defined in the Corporation's 2000 Equity Compensation Plan, in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board of Directors. If it is so determined 13 that the claimant is entitled to indemnification, payment to the claimant shall be made within 10 days after such determination. (C) If a claim under paragraph (A) of this Bylaw is not paid in full by the Corporation within thirty days after a written claim pursuant to paragraph (B) of this Bylaw has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standard of conduct which makes it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Board of Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. (D) If a determination shall have been made pursuant to paragraph (B) of this Bylaw that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (C) of this Bylaw. (E) The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph (C) of this Bylaw that the procedures and presumptions of this Bylaw are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Bylaw. (F) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Bylaw shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise. No repeal or modification of this Bylaw shall in any way diminish or adversely affect the rights of any director, officer, employee or agent of the Corporation hereunder in respect of any occurrence or matter arising prior to any such repeal or modification. (G) The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, 14 liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware. To the extent that the Corporation maintains any policy or policies providing such insurance, each such director or officer, and each such agent or employee to which rights to indemnification have been granted as provided in paragraph (H) of this Bylaw, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such director, officer, employee or agent. (H) The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and rights to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final disposition, to any employee or agent of the Corporation to the fullest extent of the provisions of this Bylaw with respect to the indemnification and advancement of expenses of directors and officers of the Corporation. (I) If any provision or provisions of this Bylaw shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Bylaw (including, without limitation, each portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Bylaw (including, without limitation, each such portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. (J) For purposes of this Bylaw: (1) "Disinterested Director" means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant. (2) "Independent Counsel" means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant's rights under this Bylaw. 15 (K) Any notice, request or other communication required or permitted to be given to the Corporation under this Bylaw shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary. ARTICLE VII CONTRACTS, PROXIES, ETC. SECTION 7.01 Contracts. Except as otherwise required by law, the Certificate --------- of Incorporation or these Bylaws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board may determine. The Chairman of the Board, the President or any Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed for or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors or the Chairman of the Board, the President or any Vice President of the Corporation may delegate contractual powers to others under his jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power. SECTION 7.02 Proxies. Unless otherwise provided by resolution adopted by the ------- Board of Directors, the Chairman of the Board, the President or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises. 16 ARTICLE VIII AMENDMENTS SECTION 8.01 Amendments. These Bylaws may be altered, amended, or repealed at ---------- any meeting of the Board of Directors or of the stockholders, provided notice of the proposed change was given in the notice of the meeting and, in the case of a meeting of the Board of Directors, in a notice given not less than two days prior to the meeting. 17 EX-27.1 4 0004.txt FINANCIAL DATA SCHEDULE
5 0001066745 ESPERION THERAPEUTICS, INC. 1,000 6-MOS DEC-31-2000 JUN-30-2000 22,685 0 0 0 0 23,084 2,937 (799) 25,877 (5,370) 0 0 (219) (2) (18,311) (25,877) 0 0 0 11,892 (685) 0 0 (11,207) 0 (11,207) 0 0 0 (11,207) (16.28) (16.28)
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