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


                                    FORM 10-Q


(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the quarterly period ended: JUNE 30, 2002

         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                                            38-3419139
(State of incorporation)                       (IRS Employer Identification No.)



                       3621 S. STATE STREET, 695 KMS PLACE
                               ANN ARBOR, MI 48108
                                 (734) 332-0506
             (Address of principal executive offices, including zip
                code, and telephone number, including area code)


    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

           [ X] Yes                             [ ] No



      The number of outstanding shares of the Registrant's common stock, as of
July 31, 2002, was 29,268,045.




<PAGE>
                          ESPERION THERAPEUTICS, INC.

                                   FORM 10-Q
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>


                                                                                                             PAGE
                                                                                                             ----
<S>                                                                                                          <C>
PART I - FINANCIAL INFORMATION

  Item 1.  Financial Statements

               Condensed Consolidated Balance Sheets as of June 30, 2002 and
                  December 31, 2001...................................................................          3

               Condensed Consolidated Statements of Operations for the Three and Six Months Ended June
                  30, 2002 and 2001, and the period from inception to June 30, 2002...................          4

               Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002
                  and 2001, and the period from inception to June 30, 2002............................          5

               Notes to Condensed Consolidated Financial Statements...................................          6

  Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations......          8

  Item 3.  Quantitative and Qualitative Disclosures about Market Risk.................................         14

PART II -- OTHER INFORMATION

  Item 1.  Legal Proceedings..........................................................................         15

  Item 2.  Changes in Securities and Use of Proceeds..................................................         15

  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...........................................................         16

SIGNATURES............................................................................................         17

INDEX TO EXHIBITS.....................................................................................         18

</TABLE>


                                       2

<PAGE>
                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                  ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)

                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                     JUNE 30,         DECEMBER 31,
   in thousands                                                                       2002               2001
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>              <C>
   ASSETS:                                                                          (UNAUDITED)
   Current assets:
     Cash and cash equivalents                                                         $45,678          $70,286
     Short-term investments                                                             11,084               --
     Prepaid expenses and other                                                            580            1,000
-------------------------------------------------------------------------------------------------------------------
       Total current assets                                                             57,342           71,286
-------------------------------------------------------------------------------------------------------------------
   Property and equipment, net                                                           3,809            3,313
   Goodwill, net                                                                         3,108            3,108
   Deposits and other assets                                                                46              633
-------------------------------------------------------------------------------------------------------------------
   Total assets                                                                        $64,305          $78,340
-------------------------------------------------------------------------------------------------------------------

   LIABILITIES AND STOCKHOLDERS' EQUITY:
   Current liabilities:
     Current portion of long-term debt                                                    $955             $863
     Accounts payable                                                                    2,282            2,925
     Accrued liabilities                                                                 1,861            2,572
-------------------------------------------------------------------------------------------------------------------
       Total current liabilities                                                         5,098            6,360
-------------------------------------------------------------------------------------------------------------------
   Long-term debt, less current portion                                                  7,437            5,482
   Stockholders' equity:
     Preferred stock                                                                        --               --
     Series A, Junior Participating Preferred Stock                                         --               --
     Common stock                                                                           29               29
     Additional paid-in capital                                                        133,258          133,143
     Notes receivable                                                                       (9)             (15)
     Accumulated deficit during the development stage                                  (80,447)         (65,320)
     Deferred stock compensation                                                        (1,050)          (1,476)
     Accumulated other comprehensive income (loss)                                         (11)             137
-------------------------------------------------------------------------------------------------------------------
       Total stockholders' equity                                                       51,770           66,498
-------------------------------------------------------------------------------------------------------------------
   Total liabilities and stockholders' equity                                          $64,305          $78,340
-------------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                       3
<PAGE>
                  ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED              SIX MONTHS ENDED
                                                             JUNE 30,                           JUNE 30,            INCEPTION TO
                                                     ----------------------------------------------------------       JUNE 30,
in thousands except share and per share data             2002              2001           2002             2001         2002
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>            <C>            <C>            <C>
Operating expenses:
  Research and development                                $5,878          $5,594         $11,583        $11,401        $66,040
  General and administrative                               1,428           1,186           3,073          2,337         14,234
  Goodwill amortization                                       --             210              --            420          1,089
  Purchased in-process research and development               --              --              --             --          4,000
--------------------------------------------------------------------------------------------------------------------------------
    Total operating expenses                               7,306           6,990          14,656         14,158         85,363
--------------------------------------------------------------------------------------------------------------------------------
Loss from operations                                      (7,306)         (6,990)        (14,656)       (14,158)       (85,363)
--------------------------------------------------------------------------------------------------------------------------------
Other income (expense):
  Interest income                                            284             710             604          1,672          6,731
  Interest expense                                          (278)           (189)           (530)          (312)        (1,796)
  Other, net                                                (524)            144            (545)           492            (19)
--------------------------------------------------------------------------------------------------------------------------------
    Total other income (expense)                            (518)            665            (471)         1,852          4,916
--------------------------------------------------------------------------------------------------------------------------------
Loss before income taxes                                  (7,824)         (6,325)        (15,127)       (12,306)       (80,447)
Provision for income taxes                                    --              --              --             --             --
--------------------------------------------------------------------------------------------------------------------------------
Net loss                                                  (7,824)         (6,325)        (15,127)       (12,306)       (80,447)
Beneficial conversion feature on preferred stock              --              --              --             --        (22,870)
--------------------------------------------------------------------------------------------------------------------------------
Net loss attributable to common stockholders             ($7,824)        ($6,325)       ($15,127)      ($12,306)     ($103,317)
--------------------------------------------------------------------------------------------------------------------------------
Basic and diluted net loss per share                      ($0.27)         ($0.24)         ($0.52)        ($0.47)
------------------------------------------------------------------------------------------------------------------
Shares used in computing basic and
diluted net loss per share                            29,237,360      25,953,137      29,217,352     25,924,846
------------------------------------------------------------------------------------------------------------------
</TABLE>


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


                                       4

<PAGE>
                  ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
                      (A COMPANY IN THE DEVELOPMENT STAGE)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                      SIX MONTHS ENDED
                                                                                         JUNE 30,                  INCEPTION TO
                                                                                -----------------------------------   JUNE 30,
   in thousands                                                                     2002             2001              2002
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>              <C>               <C>
Cash flows from operating activities:
  Net loss                                                                        ($15,127)        ($12,306)         ($80,447)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Purchased in-process research and development                                       --               --             4,000
    Depreciation and amortization                                                      731              949             4,253
    Stock-based compensation expense                                                   389              508             3,268
    Decrease in notes receivable                                                         6               46               117
    Loss on sale of property and equipment                                             101               22               123
    Non-cash interest included in long-term debt                                       177              101               580
    Changes in assets and liabilities:
      Prepaid expenses and other                                                       862             (324)             (972)
      Other assets                                                                     (17)              (3)              (96)
      Accounts payable                                                                (647)          (2,359)            2,551
      Accrued liabilities                                                             (739)           1,879             1,861
--------------------------------------------------------------------------------------------------------------------------------
         Net cash used in operating activities                                     (14,264)         (11,487)          (64,762)
--------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Purchases of property and equipment                                                 (698)            (649)           (7,046)
  Acquisition of Talaria Therapeutics, Inc.                                             --               --              (233)
  Proceeds from sale of property and equipment                                           2                2                 4
  Purchases of short-term investments                                              (34,252)              --           (34,252)
  Maturities of short-term investments                                              23,168               --            23,168
--------------------------------------------------------------------------------------------------------------------------------
         Net cash used in investing activities                                     (11,780)            (647)          (18,359)
--------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Net proceeds from issuance of convertible preferred stock                             --               --            42,200
  Proceeds from the issuance of common stock                                           152              105            78,879
  Proceeds from long-term debt                                                       1,834            3,140             9,873
  Repayments of long-term debt                                                        (653)            (426)           (2,375)
--------------------------------------------------------------------------------------------------------------------------------
         Net cash provided by financing activities                                   1,333            2,819           128,577
--------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                                                103             (192)              222
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                               (24,608)          (9,507)           45,678
Cash and cash equivalents at beginning of period                                    70,286           70,228                --
--------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                         $45,678          $60,721           $45,678
--------------------------------------------------------------------------------------------------------------------------------

Supplemental disclosures of cash flow information:

    Cash paid during the period for interest                                          $343             $203
---------------------------------------------------------------------------------------------------------------
</TABLE>


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

                                       5


<PAGE>




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


(1) BASIS OF PRESENTATION

    The accompanying unaudited condensed consolidated financial statements
include the accounts of Esperion Therapeutics, Inc. ("Esperion" or the
"Company") and its subsidiaries, and have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information and with Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete financial
statements. The Company believes that all adjustments, consisting of normal
recurring adjustments, considered necessary for a fair presentation, have been
included. The information included in this Form 10-Q should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and the consolidated financial statements and footnotes
thereto included in the Company's Form 10-K for the year ended December 31,
2001.

    Operating results for the three- and six-month periods ended June 30, 2002
and 2001 are not necessarily indicative of the results for the full year or any
future periods.


 (2) COMPREHENSIVE LOSS

    Comprehensive loss is the total of net loss and all other non-owner changes
in equity. Total comprehensive loss was $7,961,000 and $6,340,000 for the
three-month periods ended June 30, 2002 and 2001, respectively, and $15,275,000
and $12,396,000, for the six-month periods ended June 30, 2002 and 2001,
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.


 (3) BASIC AND DILUTED LOSS PER SHARE

    Basic and diluted net loss per share amounts have been calculated using the
weighted average number of shares of common stock outstanding during the
respective periods. Options for the purchase of 400,353 and 666,026 shares of
common stock for the three-month periods ended June 30, 2002 and 2001,
respectively, and 482,927 and 763,064 for the six-month periods ended June 30,
2002 and 2001, respectively, were not included in the calculation of diluted net
loss per share as doing so would have been anti-dilutive.


(4) COMMITMENTS AND CONTINGENCIES

    The Company has entered into various license and other agreements with third
parties related to some of its products in development. The Company may be
obligated to make milestone and license maintenance payments, as defined in the
respective license and other agreements relating to the Company's proprietary
rights, up to an aggregate remaining amount of $30.2 million. Upon reaching
certain milestones, the payments are charged to research and development
expenses in the accompanying consolidated statements of operations. There were
no milestones achieved or payments made during the first six months of 2002. At
the present time, the Company can give no assurances that such future milestones
will be achieved. In addition to the milestone and license maintenance payments,
the Company may be obligated to make royalty payments on future sales pursuant
to formulas in the agreements.

                                       6
<PAGE>
(5) ADOPTION OF NEW ACCOUNTING STANDARD

    The Company adopted Statement of Financial Accounting Standard No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142"), effective January 1,
2002. Under SFAS No. 142, goodwill and certain indefinite lived intangible
assets are no longer amortized but are reviewed annually for impairment. In
connection with the adoption of SFAS No. 142, the Company has completed the
transitional goodwill impairment test, which requires the Company to compare its
fair value to the carrying value of its net assets. Based on this analysis, the
Company has concluded that no impairment existed at the time of adoption, and
accordingly, the Company has not recognized any transitional impairment loss.

    Goodwill reflects the excess of the purchase price over net assets in the
Company's September 2000 acquisition of Talaria Therapeutics, Inc. ("Talaria")
and the milestone payments made to date under the related merger agreement. The
gross carrying amount of goodwill is approximately $4.2 million, and accumulated
amortization is approximately $1.1 million as of June 30, 2002 and December 31,
2001.

    As required by SFAS No. 142, the results of operations for periods prior to
its adoption have not been restated. Had SFAS No. 142 been adopted at January 1,
2001, the pro forma loss for the three- and six-month periods ended June 30,
2001 and for the period from inception to June 30, 2001 would have been as
follows:


<TABLE>
<CAPTION>

                                                                          THREE MONTHS        SIX MONTHS
                                                                              ENDED             ENDED         INCEPTION TO
                                                                            JUNE 30,           JUNE 30,         JUNE 30,
in thousands except share and per share data                                  2001               2001             2001
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                 <C>              <C>
Net loss:
      Reported net loss                                                     ($6,325)         ($12,306)        ($52,695)
      Goodwill amortization                                                     210               420              670
--------------------------------------------------------------------------------------------------------------------------
      Adjusted net loss                                                      (6,115)          (11,886)         (52,025)
      Beneficial conversion feature upon issuance of preferred stock             --                --          (22,870)
--------------------------------------------------------------------------------------------------------------------------
      Adjusted net loss attributable to common stockholders                 ($6,115)         ($11,886)        ($74,895)
--------------------------------------------------------------------------------------------------------------------------

Basic and diluted net loss per share:
      Reported basic and diluted net loss per share                          ($0.24)           ($0.47)
      Goodwill amortization                                                    0.00              0.01
 ------------------------------------------------------------------------------------------------------
      Adjusted basic and diluted net loss per share                          ($0.24)           ($0.46)
------------------------------------------------------------------------------------------------------
</TABLE>


(6) SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

    On April 18, 2002, the Company's Board of Directors approved a stockholder
rights plan as set forth in the Rights Agreement dated April 18, 2002 between
the Company and StockTrans, Inc., as rights agent (the "Rights Agreement"). In
connection with the approval of the Rights Agreement, the Board of Directors
declared a distribution of one Right for each outstanding share of the Company's
common stock, par value $.001 per share, to stockholders of record at the close
of business on April 18, 2002. Each Right, if and when exercisable, will entitle
the holder to purchase from the Company one one-hundredth (1/100) of a share of
the Series A Junior Participating Preferred Shares, par value $.01 per share, or
a combination of securities and assets of equivalent value, at a per unit,
adjustable Purchase Price of $50.00. The rights will not be exercisable until
the earlier of (i) ten business days following the first public announcement
that a person or group of persons together with all affiliates and associates
has acquired beneficial ownership of 15% or more of the then-outstanding Common
Stock, or (ii) ten business days following the commencement of a tender offer or
exchange offer, that if consummated, would result in a person or group of
persons together with all affiliates and associates beneficially owning 15% or
more of the then-outstanding Common Stock. The Rights will expire at the close
of business on April 18, 2012, unless earlier redeemed or terminated by the
Company.

                                       7
<PAGE>





ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

    The following discussion provides an analysis of the Company's condensed
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 information contained in this report includes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are often identified by words such as
"hope," "may," "believe," "anticipate," "plan," "expect," "intend," "assume" and
similar expressions. The Company cautions readers that the forward-looking
statements, which speak only as of the date of this report, reflect management's
current expectations, estimations and projections and involve certain factors,
such as risks and uncertainties, which may cause our actual results to be far
different from those suggested by our forward-looking statements. These factors
include, but are not limited to, risks associated with: management's ability to
successfully execute its business strategies; the progress and cost of
development of our product candidates; the extent and timing of market
acceptance of new products developed by the Company or its competitors;
dependence on third parties to conduct clinical trials for our product
candidates; the extent and timing of regulatory approval, as desired or
required, for our product candidates; dependence on licensing arrangements and
strategic relationships with third parties; clinical trials; manufacturing;
dependence on patents and proprietary rights; procurement, maintenance,
enforcement and defense of the Company's patents and proprietary rights;
competitive conditions in the industry; business cycles affecting the markets in
which the Company's products may be sold; extraordinary events and transactions;
the timing and extent of the Company's financing needs; fluctuations in foreign
exchange rates; economic conditions generally or in various geographic areas;
and other factors. All of the foregoing factors are difficult to forecast. More
detailed information about these and other factors is set forth in the Company's
Form 10-K for the year ended December 31, 2001 and other filings with the
Securities and Exchange Commission. 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 other than as required under the federal securities
law.


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 and metabolic disease. We are a development stage
biopharmaceutical company and have not generated any revenues from any source,
including from product sales. We have incurred a cumulative net loss of
approximately $80.4 million from inception (May 18, 1998) through June 30, 2002
excluding the beneficial conversion feature of preferred stock. 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 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 be incurred and increase in
preparation for the commercialization of our products. Until we generate
positive cash flow, we will rely on financing our operations with our existing
cash balance, additional equity or debt offerings or other financings and/or
payments from potential strategic relationships with development partners that
we may enter into in the future.

                                       8

<PAGE>





RESULTS OF OPERATIONS

   OPERATING EXPENSES

<TABLE>
<CAPTION>

                                            THREE MONTHS ENDED JUNE 30,                 SIX MONTHS ENDED JUNE 30,
                                    ----------------------------------------    --------------------------------------
dollars in thousands                2002       2001         % CHANGE              2002          2001         % CHANGE
-----------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>            <C>               <C>              <C>              <C>
Research and development          $5,878      $5,594         5.1%                $11,583         $11,401          1.6%
 % of total                         80.5%       80.0%                               79.0%           80.5%

General and administrative        $1,428      $1,186        20.4%                 $3,073          $2,337         31.5%
 % of total                         19.5%       17.0%                               21.0%           16.5%

Goodwill amortization                 --        $210      -100.0%                     --            $420       -100.0%
 % of total                           --         3.0%                                 --             3.0%

</TABLE>


Three Months Ended June 30, 2002 and 2001

    Research and Development Expenses. Research and development expenses include
both external and internal costs related to the research and development
activities on our existing product candidates as well as discovery efforts on
potential new product candidates. External costs include costs related to
manufacturing, clinical trials, toxicology or pharmacology studies performed by
third parties, milestone payments under certain license and other agreements and
other related expenses. Internal costs include all payroll and related costs
attributable to research and development activities, as well as an allocation of
overhead expenses incurred by the Company. Research and development expenses
increased to approximately $5.9 million for the three months ended June 30, 2002
compared to approximately $5.6 million for the three months ended June 30, 2001.
This 5.1% increase is primarily due to higher clinical trial costs on our
ETC-216 and ETC-642 product candidates. During the second quarter of 2002,
patients were being actively enrolled in the Company's Phase II trial of ETC-216
and Phase I trial of ETC-642. During the second quarter of 2001, the Company had
an ongoing Phase II trial of ETC-588. The magnitude of the Company's operating
expenses, particularly research and development expense, are largely dependent
upon the number, timing, nature and size of clinical trials. As clinical trials
continue to progress this year, the Company anticipates that research and
development costs will fluctuate as compared to current quarter levels based on
the timing and size of the trials. As our product candidates progress through
development, clinical trial costs will continue to increase due to the size and
cost of more advanced clinical trials and the Company anticipates that research
and development costs will fluctuate depending on the number, timing, nature and
size of these trials.

    General and Administrative Expenses. General and administrative expenses
include the cost of salaries, employee benefits, and other costs associated with
the Company's finance, accounting, human resources, legal, administrative,
business development and executive management functions. General and
administrative expenses increased to approximately $1.4 million for the three
months ended June 30, 2002 compared to approximately $1.2 million for the three
months ended June 30, 2001. This 20.4% increase resulted from a greater number
of general and administrative personnel, as well as increased overhead and
related costs in support of the Company's anticipated research and development
activities as compared to the prior year.

    Goodwill Amortization. Goodwill amortization reflects the amortization of
the amount of the excess of the purchase price over net assets in the Company's
September 2000 acquisition of Talaria and the milestone payments made to date
under the related merger agreement. Net goodwill included in the Company's
Consolidated Financial Statements was $3.1 million at June 30, 2002 and December
31, 2001. Goodwill amortization expense was $0 and $210,000 for the three months
ended June 30, 2002 and 2001, respectively.

                                       9

<PAGE>




    The Company adopted SFAS No. 142, effective January 1, 2002, under which
goodwill and certain indefinite lived intangible assets are no longer amortized
but are reviewed annually for impairment. In connection with the adoption of
SFAS No. 142, the Company has completed the transitional goodwill impairment
test, which requires the Company to compare its fair value to the carrying value
of its net assets. Based on this analysis, the Company has concluded that no
impairment existed at the time of adoption, and, accordingly, the Company has
not recognized any transitional impairment loss.

    Other Income (Expense). Other income (expense) consists of interest income
(expense), foreign currency transaction gain (loss), and gain (loss) on the
disposal of property and equipment. Interest income decreased to approximately
$284,000 for the three months ended June 30, 2002 compared to approximately
$710,000 for the three months ended June 30, 2001. The decrease is primarily
attributable to lower interest rates in 2002 compared to the same period last
year, as well as to our investing our cash more conservatively as compared to
2001. Interest expense for the three months ended June 30, 2002 and 2001 was
approximately $278,000 and $189,000, respectively, and represents interest
incurred on equipment financing facilities and a special project loan. The
increase in interest expense resulted from higher outstanding borrowings in 2002
as compared to the same period in 2001.

    During the three months ended June 30, 2002, we recorded approximately
$413,000 of unrealized foreign currency transaction losses compared to
approximately $144,000 of unrealized foreign currency transaction gains for the
three months ended June 30, 2001, on transactions that primarily related to
manufacturing activities in Europe for clinical trials. These transaction
gains/(losses) result from liabilities denominated in foreign currencies
primarily the Swedish Kronor and the Euro. As the exchange rate between the US
dollar and these currencies fluctuates, the Company records a gain (loss) on
these transactions. During the second quarter of 2002, the US dollar has
generally weakened against these foreign currencies whereas the opposite was
true in the second quarter of 2001. During the three months ended June 30, 2002,
we recorded approximately $112,000 of loss on the disposal and/or sale of
equipment primarily related to our lab and office facility in Sweden.

    Net Loss. The net loss was approximately $7.8 million for the three months
ended June 30, 2002 compared to approximately $6.3 million for the three months
ended June 30, 2001. The increase in net loss resulted from increases in general
and administrative and research and development expenses, the increase in
unrealized foreign currency transaction losses, and the decrease in interest
income, offset in part by the decrease in goodwill amortization.

Six Months Ended June 30, 2002 and 2001

    Research and Development Expenses. Research and development expenses
increased to approximately $11.6 million for the six months ended June 30, 2002
compared to approximately $11.4 million for the six months ended June 30, 2001.
This 1.6% increase is primarily due to higher clinical trial costs on our
ETC-216 and ETC-642 product candidates. During the first six months of 2002,
patients were being actively enrolled in the Company's Phase II trial of ETC-216
and Phase I trial of ETC-642. During the first quarter of 2001, the Company was
completing a Phase I trial of ETC-216 and initiated a Phase II trial of ETC-588,
which continued during the second quarter. The magnitude of the Company's
operating expenses, particularly research and development expense, are largely
dependent upon the number, timing, nature and size of clinical trials. As
clinical trials progress this year, the Company anticipates that research and
development costs will fluctuate as compared to current quarter levels based on
the number, timing, nature, and size of the trials. As our product candidates
progress through development, clinical trial costs will continue to increase due
to the size and cost of more advanced clinical trials and the Company
anticipates that research and development costs will fluctuate depending on the
number, timing, nature and size of these trials.

General and Administrative Expenses. General and administrative expenses
increased to approximately $3.1 million for the six months ended June 30, 2002
compared to approximately $2.3 million for the six months ended June 30, 2001.
This 31.5% increase resulted from a greater number of general and administrative
personnel, as well as increased overhead and related costs in support of the
Company's anticipated research and development activities as compared to the
prior year. In addition, the Company recorded approximately $148,000 in expenses
related to employee severance and benefits resulting from actions taken in March
2002 to curtail or significantly reduce spending on certain pre-clinical
research and other activities that lie outside of the Company's primary areas of

                                       10
<PAGE>




focus in cardiovascular metabolic disease. The Company has realigned resources
toward those primary areas of focus, including clinical development.

    Goodwill Amortization. Goodwill amortization expense was $0 and $420,000 for
the six months ended June 30, 2002 and 2001, respectively. The decrease in
goodwill amortization expense resulted from the Company's adoption of SFAS No.
142 effective January 1, 2002 as discussed in Management's Discussion and
Analysis of Financial Condition and Results of Operations above.

    Other Income (Expense). Interest income decreased to approximately $604,000
for the six months ended June 30, 2002 compared to approximately $1.7 million
for the six months ended June 30, 2001. The decrease is primarily attributable
to lower interest rates in 2002 compared to the same period last year, as well
as to our investing our cash more conservatively as compared to 2001. Interest
expense for the six months ended June 30, 2002 and 2001 was approximately
$530,000 and $312,000, respectively, and represents interest incurred on
equipment financing facilities and a special project loan. These transaction
gains/(losses) result from liabilities denominated in foreign currencies,
primarily the Swedish Kronor and the Euro. As the exchange rate between the US
dollar and these currencies fluctuates, the Company records a gain (loss) on
these transactions. During the first half of 2002, the US dollar has generally
weakened against these foreign currencies whereas the opposite was true in the
first half of 2001. The increase in interest expense resulted from higher
outstanding borrowings in 2002 as compared to the same period in 2001.

    During the six months ended June 30, 2002, we recorded approximately
$433,000 of unrealized foreign currency transaction losses compared to
approximately $520,000 of unrealized foreign currency transaction gains for the
six months ended June 30, 2001, on transactions that primarily related to
manufacturing activities in Europe for clinical trials. During the six months
ended June 30, 2002, we recorded approximately $112,000 of loss on the disposal
and/or sale of equipment, primarily related to our lab and office facility in
Sweden, compared to $23,000 for the six months ended June 30, 2001.

    Net Loss. The net loss was approximately $15.1 million for the six months
ended June 30, 2002 compared to approximately $12.3 million for the six months
ended June 30, 2001. The increase in net loss resulted from increases in general
and administrative and research and development expenses, the increase in
unrealized foreign currency transaction losses, and the decrease in interest
income, offset in part by the decrease in goodwill amortization.

LIQUIDITY AND CAPITAL RESOURCES

    As of June 30, 2002 and 2001, the Company had cash, cash equivalents and
short-term investments of approximately $56.8 million and $60.7 million,
respectively. Our investment policy emphasizes liquidity and preservation of
principal over other portfolio considerations. We select investments that
maximize interest income to the extent possible by investing cash in short-term,
investment-grade, interest-bearing securities. During the second quarter of
2002, the Company invested its cash in more conservative securities to further
protect the principal as compared to the previous period. This was primarily
achieved by more heavily weighting its investments in government securities,
such as treasury bonds, treasury notes and notes of other government agencies
rather than in securities issued by corporations, including commercial paper. We
believe that our current cash position, along with available borrowings under
our credit facilities will be sufficient to fund our operations as currently
planned, capital expenditures and debt service until at least the end of 2003.

    During the six months ended June 30, 2002 and 2001, net cash used in
operating activities was approximately $14.3 million and $11.5 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, 2002
and 2001, respectively, was approximately $11.9 million and $647,000,
respectively. The net cash used in investing activities for the six months ended
June 30, 2002 resulted primarily from the purchases of short-term investments
and capital expenditures offset, in part, by the maturities of short-term
investments. The net cash used in investing activities for the six months ended

                                       11
<PAGE>




June 30, 2001 resulted primarily from the acquisition of laboratory equipment,
furniture and fixtures and other office equipment.

    Net cash proceeds from financing activities were $1.3 million and $2.8
million for the six months ended June 30, 2002 and 2001, respectively. The net
cash proceeds from financing activities for the six months ended June 30, 2002
resulted primarily from $1.8 million of additional borrowings on a special
project loan and equipment term loans, and $152,000 received from the issuance
of common stock to employees under the Company's equity compensation plans. The
proceeds were partially offset by $653,000 of cash used to repay borrowings
under equipment loans. The net cash proceeds from financing activities for the
six months ended June 30, 2001 resulted primarily from $3.1 million of
additional borrowings on a special project loan, and $105,000 raised from the
issuance of common stock to employees under the Company's equity compensation
plans. The proceeds were partially offset by $426,000 of cash used to repay
borrowings under an equipment loan.

    We continually evaluate opportunities to sell additional equity, obtain
credit from lenders, enter into strategic relationships, or further strengthen
our financial position in other ways. The sale of additional equity, whether
publicly or privately, could result in dilution to our stockholders. In
addition, from time to time, we may consider the acquisition of or investment in
complementary businesses, products or technologies that might affect our
liquidity requirements or position or cause us to issue additional securities.
There can be no assurance that financing will be available to us in the amounts
or on terms acceptable to us, if at all.

    As of June 30, 2002, the Company had the following credit facilities and
outstanding borrowings:

    -   A $2.0 million credit facility with a U.S. bank that may be used to
        finance purchases of equipment. Borrowings under this facility bear
        interest at the bank's prime rate (4.5% at June 30, 2002). Borrowings
        outstanding under this facility as of June 30, 2002 amounted to
        approximately $1.0 million. The facility expires in December 2002.

   -    An additional credit facility with a U.S. lending institution to finance
        purchases of equipment. This facility allowed for borrowings of up to
        $2.5 million. Approximately $1.5 million was outstanding under this
        facility at a weighted average interest rate of 12% as of June 30, 2002
        and no additional borrowings are allowed.

    -   A credit facility with a Swedish entity totaling 50 million Swedish
        kronor ($5.4 million as of June 30, 2002). The proceeds from this
        facility may only be used to finance the development of our ETC-216
        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 is payable in five equal annual installments starting in
        December 2004. The outstanding borrowings, including accrued interest of
        5.5 million Swedish kronor ($547,000), amounted to 50.5 million Swedish
        kronor ($5.5 million) as of June 30, 2002.

    -   A memorandum of understanding with an economic development agency in
        Michigan whereby we can borrow up to $500,000 for equipment purchases at
        an interest rate of 4%. As of June 30, 2002, outstanding borrowings
        under this arrangement totaled $382,000.

    We anticipate that our capital expenditures for the next twelve months will
be approximately $1.0 million. We expect that these expenditures will primarily
include lab and computer equipment.

    We lease our corporate and research and development facilities under
operating leases expiring at various times through December 2003. Under certain
of these arrangements, including the lease for our headquarters facility, we may
extend these leases for one or more additional periods. Total minimum future
payments under these leases for the next twelve months are approximately
$632,000 as of June 30, 2002.

    We have entered into license and other agreements with certain third
parties, which require us to make payments upon achievement of the milestones
set forth in the agreements. The remaining payments that we could be obligated
to make under those agreements could over time amount to $30.2 million. If we
sell products using technology

                                       12
<PAGE>




licensed under the agreements, we would be obligated to make royalty payments to
the licensor pursuant to formulas in the agreements. There can be no assurance
that we will meet any or all of the milestones in, or sell any products
requiring royalty payments under, our license agreements.

    We expect our operating expenses in 2002 to fluctuate from quarter to
quarter. 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 our commercial manufacturing capabilities, the ability to consummate
additional licensing and/or partnering arrangements, and the demand for our
product candidates, if and when approved by the FDA or other regulatory
authorities.

INCOME TAXES

    As of June 30, 2002, we had operating loss carryforwards of approximately
$52.4 million. These carryforwards do not include tax credits for start up costs
of approximately $17.5 million, which may be utilized upon the realization of
profits. These net operating loss carryforwards begin to expire in 2013.
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 due to historical losses.

EMPLOYEES

    As of June 30, 2002, we had 68 full-time employees. Of these employees, 44
were engaged in research, preclinical and clinical development, regulatory
affairs, and/or manufacturing activities and 24 were engaged in general and
administrative activities.

CRITICAL ACCOUNTING POLICIES

    Management's discussion and analysis of the Company's financial condition
and results of operations are based upon the Company's Consolidated Financial
Statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of any contingent
assets and liabilities as of the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Management
regularly reviews its estimates and assumptions, which are based on historical
experience and on various other factors and judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates and assumptions.

    Management believes that the following critical accounting policy is
affected by significant judgments and estimates used in the preparation of its
consolidated financial statements:

    The Company records estimated expenses under the contracts with third
parties on a percentage of completion basis. These contracts cover ongoing
clinical trials, manufacturing and supply agreements, and third party toxicology
or pharmacology studies. The expenses are recorded as the work under the
contract is completed and the Company may record an accrued liability or prepaid
expense on its Consolidated Balance Sheet, depending on the payment terms under
each contract. As of June 30, 2002, the Company had total potential obligations
of approximately $11.4 million under contracts accounted for on the percentage
of completion basis. Management estimates that approximately $8.4 million of the
contract obligations had been incurred through June 30, 2002 and approximately
$801,000 is included in accrued liabilities in the accompanying balance sheet,
for expenses under contracts based on the percentage of completion basis.

                                       13

<PAGE>




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 that we can earn on
our investment portfolio and on the increase or decrease in the amount of
interest expense that 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 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, 2002. Declines
in interest rates over time will, however, reduce our interest income such
reduction is reported on page 11 in Management's Discussion and Analysis, under
the subcaption "Six Months Ended June 30, 2002 and 2001, Other Income (Expense)"
while increases in interest rates over time will increase our interest expense.


                                       14
<PAGE>
    PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     Not applicable.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

    Not applicable.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

    Not applicable.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          The Annual Meeting of Stockholders of the Company was held on April
18, 2002. At the Annual Meeting, the stockholders of the Company (1) approved
the re-election of Ronald M. Cresswell, Ph.D. and Eileen M. More as Directors of
the Company, each to hold office until the Annual Meeting of Stockholders to be
held in 2005 and until their respective successors are elected and qualified;
and (2) approved the amendment to the Company's 2000 Equity Compensation Plan.
The votes were as follows:

<TABLE>
<CAPTION>

                                                            WITHHELD                         BROKER
                                             FOR           OR AGAINST         ABSTAINED     NON-VOTES
------------------------------------------------------------------------------------------------------
<S>                                      <C>               <C>                 <C>          <C>
(1) Election of Directors:
     Ronald M. Cresswell, Ph.D.          20,180,300            --              1,716,264        --
     Eileen M. More                      20,190,900            --              1,705,664        --

(2) Amendment to 2000 Equity
     Compensation Plan:                  17,284,443        4,589,873              22,247        --


</TABLE>


ITEM 5.  OTHER INFORMATION

    Not applicable.

                                       15
<PAGE>
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS

<TABLE>
<CAPTION>

 NUMBER                                                    EXHIBIT
----------------------------------------------------------------------------------------------------------------
<S>        <C>

   3.5     Certificate of Designations, Preferences, Related Rights, Qualifications, Limitations and
           Restrictions of Series A Junior Participating Preferred Shares of Esperion Therapeutics, Inc.
           Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed April 23,
           2002.

   4.2     Rights Agreement between Esperion Therapeutics, Inc. and StockTrans, Inc., as Rights Agent, dated
           as of April 18, 2002.  Incorporated by reference to Exhibit 4.2 to the Company's Current Report on
           Form 8-K filed April 23, 2002.

 10.42*    Esperion Therapeutics, Inc. 1998 Stock Option Plan (Amended, effective April 18, 2002)

 10.43*    Esperion Therapeutics, Inc. 2000 Equity Compensation Plan (Amended and Restated, effective
           April 18, 2002).

 10.44     Employment arrangement between William F. Brinkerhoff and Esperion Therapeutics, Inc.
           dated April 19, 2002.

  99.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
           Oxley Act of 2002.

  99.2     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
           Oxley Act of 2002.

    *      Compensation plan or arrangement in which directors and/or executive officers are eligible to
           participate

</TABLE>

 (b) REPORTS ON FORM 8-K

    A report on Form 8-K was filed on April 23, 2002 under Item 4, Changes in
Registrant's Certifying Accountant, and Item 5, Other Events.


                                       16
<PAGE>





                                   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: August 14, 2002           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
                                 Chief Operating Officer
                                 and Chief Financial Officer
                                 (Principal Financial Officer)



                                       17
<PAGE>





                              INDEX TO EXHIBITS
<TABLE>
<CAPTION>


    NUMBER                                                    EXHIBIT
--------------- --------------------------------------------------------------------------------------------------------------
<S>             <C>
     3.5        Certificate of Designations, Preferences, Related Rights, Qualifications, Limitations and
                Restrictions of Series A Junior Participating Preferred Shares of Esperion Therapeutics, Inc.  Incorporated by
                reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed April 23, 2002.


     4.2        Rights Agreement between Esperion Therapeutics, Inc. and StockTrans, Inc., as Rights Agent, dated
                as of April 18, 2002.  Incorporated by reference to Exhibit 4.2 to the Company's Current Report on
                Form 8-K filed April 23, 2002.

    10.42*      Esperion Therapeutics, Inc. 1998 Stock Option Plan (Amended, effective April 18, 2002)

    10.43*      Esperion Therapeutics, Inc. 2000 Equity Compensation Plan (Amended and Restated, effective
                April 18, 2002).

    10.44       Employment arrangement between William F. Brinkerhoff and Esperion Therapeutics, Inc.
                dated April 19, 2002.

     99.1       Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
                Oxley Act of 2002.


     99.2       Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
                Oxley Act of 2002.

      *         Compensation plan or arrangement in which directors and/or executive officers are eligible to
                participate

</TABLE>

                                     18