##### Table of Contents



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: September 30, 2003                                      
|           |  |                                                                                         
|           |  | OR                                                                                      
|           |  |                                                                                         
|[   ]      |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|           |  | For the transition period from ________ to ________                                     

Commission file number: 001-16033

ESPERION THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)


|                         |  |                                  
|------------------------ |  | ---------------------------------
|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


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

[X] Yes             [   ] No


The number of outstanding shares of the registrants common stock, as of
October 23, 2003, was 34,081,648.





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TABLE OF CONTENTS



|                                 |                                                                                               |                                                          |  |  |  |  |  | 
|-------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION  
|                                 | Item 1. Financial Statements                                                                 
|                                 |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                   
|                                 |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS         
|                                 |                                                                                               | CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY          
|                                 |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS         
|                                 |                                                                                               | NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                 | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                 | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                                 | Item 4. Controls and Procedures                                                              
|PART II  OTHER INFORMATION     
|                                 | Item 1. Legal Proceedings                                                                    
|                                 | Item 2. Changes in Securities and Use of Proceeds                                            
|                                 | Item 3. Defaults Upon Senior Securities                                                      
|                                 | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                 | Item 5. Other Information                                                                    
|                                 | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                      
|INDEX TO EXHIBITS               
|2000 Equity Compensation Plan   
|Loan and Security Agreement     
|Section 302 Certification of CEO
|Section 302 Certification of CFO
|Section 906 Certification of CEO
|Section 906 Certification of CFO



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##### Table of Contents



ESPERION THERAPEUTICS, INC.

FORM 10-Q
TABLE OF CONTENTS

|                               |                                                                                               |                                                                                                                                                                      |    |      |   | 
|------------------------------ | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ---- | - | 
|                               |                                                                                               |                                                                                                                                                                      |    | Page
|                               |                                                                                               |                                                                                                                                                                      |    |     
|PART I - FINANCIAL INFORMATION |                                                                                               |                                                                                                                                                                      |    |     
|                               | Item 1. Financial Statements                                                                  |                                                                                                                                                                      |    |      |  
|                               |                                                                                               | Condensed Consolidated Balance Sheets as of September 30, 2003 and
December 31, 2002                                                                                 |    |      | 3 | 
|                               |                                                                                               | Condensed
Consolidated Statements of Operations for the Three and Nine Months
Ended September 30, 2003 and 2002, and the period
from inception to September 30, 2003 |    |      | 4 | 
|                               |                                                                                               | Condensed
Consolidated Statement of Stockholders Equity for the
Nine Months Ended September 30, 2003                                                                |    |      | 5 | 
|                               |                                                                                               | Condensed
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2003 and 2002, and the period
from inception to September 30, 2003           |    |      | 6 | 
|                               |                                                                                               | Notes to Condensed Consolidated Financial Statements                                                                                                                 |    |      | 7 | 
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations |                                                                                                                                                                      |    | 11   |  
|                               | Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                                                                                      |    | 17   |  
|                               | Item 4. Controls and Procedures                                                               |                                                                                                                                                                      |    | 17   |  
|PART II  OTHER INFORMATION    |                                                                                               |                                                                                                                                                                      |    |     
|                               | Item 1. Legal Proceedings                                                                     |                                                                                                                                                                      |    | 18   |  
|                               | Item 2. Changes in Securities and Use of Proceeds                                             |                                                                                                                                                                      |    | 18   |  
|                               | Item 3. Defaults Upon Senior Securities                                                       |                                                                                                                                                                      |    | 18   |  
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                   |                                                                                                                                                                      |    | 18   |  
|                               | Item 5. Other Information                                                                     |                                                                                                                                                                      |    | 18   |  
|                               | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                                                                                      |    | 19   |  
|SIGNATURES                     |                                                                                               |                                                                                                                                                                      | 20 |     
|INDEX TO EXHIBITS              |                                                                                               |                                                                                                                                                                      | 21 |     

2



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements

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




CONDENSED CONSOLIDATED BALANCE SHEETS

|                                           |                                                  |                            |        |               |        |              |        |         |        | 
|------------------------------------------ | ------------------------------------------------ | -------------------------- | ------ | ------------- | ------ | ------------ | ------ | ------- | ------ | 
|                                           |                                                  |                            |        | September 30, |        | December 31,
|in thousands                               |                                                  | 2003                       |        | 2002         
|                                           |                                                  |                            |        |              
|                                           |                                                  | (Unaudited)                |        |               |        |             
|Assets:                                    |                                                  |                            |        |               |        |             
|Current assets:                            |                                                  |                            |        |               |        |              |        |        
|                                           | Cash and cash equivalents                        |                            | $      | 64,685        |        |              | $      | 40,499  |       
|                                           | Short-term investments                           |                            |        | 27,707        |        |              |        | 4,354   |       
|                                           | Prepaid expenses and other                       |                            |        | 1,426         |        |              |        | 410     |       
|                                           |                                                  |                            |        |               |        |              |        |         |       
|                                           |                                                  | Total current assets       |        |               | 93,818 |              |        |         | 45,263 | 
|                                           |                                                  |                            |        |               |        |              |        |         |       
|Property and equipment, net                |                                                  |                            | 2,498  |               |        |              | 3,001  |        
|Goodwill                                   |                                                  |                            | 3,108  |               |        |              | 3,108  |        
|Deposits and other assets                  |                                                  |                            | 6      |               |        |              | 35     |        
|                                           |                                                  |                            |        |               |        |              |        |         |       
|Total assets                               |                                                  | $                          | 99,430 |               |        | $            | 51,407 |        
|                                           |                                                  |                            |        |               |        |              |        |         |       
|Liabilities and Stockholders Equity:      |                                                  |                            |        |               |        |              |        |        
|Current liabilities:                       |                                                  |                            |        |               |        |              |        |        
|                                           | Current portion of long-term debt                |                            | $      | 1,052         |        |              | $      | 1,061   |       
|                                           | Accounts payable                                 |                            |        | 1,110         |        |              |        | 1,687   |       
|                                           | Accrued liabilities                              |                            |        | 4,136         |        |              |        | 2,185   |       
|                                           |                                                  |                            |        |               |        |              |        |         |       
|                                           |                                                  | Total current liabilities  |        |               | 6,298  |              |        |         | 4,933  | 
|                                           |                                                  |                            |        |               |        |              |        |         |       
|Long-term debt, less current portion       |                                                  |                            | 8,074  |               |        |              | 7,731  |        
|Commitments and contingencies (Note 8)     |                                                  |                            |        |               |        |              |        |        
|Stockholders equity:                      |                                                  |                            |        |               |        |              |        |        
|                                           | Preferred stock                                  |                            |        |              |        |              |        |        |       
|                                           | Common stock                                     |                            |        | 34            |        |              |        | 29      |       
|                                           | Additional paid-in capital                       |                            |        | 201,677       |        |              |        | 133,411 |       
|                                           | Notes receivable                                 |                            |        |              |        |              |        | (3      | )     
|                                           | Accumulated deficit during the development stage |                            |        | (116,450      | )      |              |        | (94,046 | )     
|                                           | Deferred stock compensation                      |                            |        | (148          | )      |              |        | (589    | )     
|                                           | Accumulated other comprehensive loss             |                            |        | (55           | )      |              |        | (59     | )     
|                                           |                                                  |                            |        |               |        |              |        |         |       
|                                           |                                                  | Total stockholders equity |        |               | 85,058 |              |        |         | 38,743 | 
|                                           |                                                  |                            |        |               |        |              |        |         |       
|Total liabilities and stockholders equity |                                                  | $                          | 99,430 |               |        | $            | 51,407 |        
|                                           |                                                  |                            |        |               |        |              |        |         |       

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

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |        |         | 
|------------------------------------------------------------- | --------------------------------------------- | ---------------------------- | ---------- | ------------------ | ----- | ----------------- | ---------- | ------------------------- | ----- | ---- | ---------- | ------ | ------ | -- | ---------- | ------ | ------ | -- | -------- | ------ | ------- | 
|                                                              |                                               |                              |            | Three Months Ended |       | Nine Months Ended |            |                          
|                                                              |                                               |                              |            | September 30,      |       | September 30,     |            | Inception toSeptember 30,
|                                                              |                                               |                              |            |                    |       |                   |           
|in thousands, except share and per share data                 |                                               | 2003                         |            | 2002               |       | 2003              |            | 2002                      |       | 2003
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |     
|Operating expenses:                                           |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |       
|                                                              | Research and development                      |                              | $          | 4,473              |       |                   | $          | 5,416                     |       |      | $          | 16,204 |        |    | $          | 16,999 |        |    | $        | 92,652 |        
|                                                              | General and administrative                    |                              |            | 1,748              |       |                   |            | 1,677                     |       |      |            | 4,938  |        |    |            | 4,750  |        |    |          | 22,054 |        
|                                                              | Goodwill amortization                         |                              |            |                   |       |                   |            |                          |       |      |            |       |        |    |            |       |        |    |          | 1,089  |        
|                                                              | Purchased in-process research and development |                              |            |                   |       |                   |            |                          |       |      |            |       |        |    |            |       |        |    |          | 4,000  |        
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |        |        
|                                                              |                                               | Total operating expenses     |            |                    | 6,221 |                   |            |                           | 7,093 |      |            |        | 21,142 |    |            |        | 21,749 |    |          |        | 119,795 | 
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |        |        
|Loss from operations                                          |                                               |                              | (6,221     | )                  |       |                   | (7,093     | )                         |       |      | (21,142    | )      |        |    | (21,749    | )      |        |    | (119,795 | )     
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |        |        
|Other income (expense):                                       |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |       
|                                                              | Interest income                               |                              |            | 191                |       |                   |            | 258                       |       |      |            | 440    |        |    |            | 862    |        |    |          | 7,637  |        
|                                                              | Interest expense                              |                              |            | (331               | )     |                   |            | (289                      | )     |      |            | (960   | )      |    |            | (819   | )      |    |          | (3,345 | )      
|                                                              | Other, net                                    |                              |            | (202               | )     |                   |            | 144                       |       |      |            | (742   | )      |    |            | (401   | )      |    |          | (947   | )      
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |        |        
|                                                              |                                               | Total other income (expense) |            |                    | (342  | )                 |            |                           | 113   |      |            |        | (1,262 | )  |            |        | (358   | )  |          |        | 3,345   | 
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |        |        
|Loss before income taxes                                      |                                               |                              | (6,563     | )                  |       |                   | (6,980     | )                         |       |      | (22,404    | )      |        |    | (22,107    | )      |        |    | (116,450 | )     
|Provision for income taxes                                    |                                               |                              |           |                    |       |                   |           |                           |       |      |           |        |        |    |           |        |        |    |         |       
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |        |        
|Net loss                                                      |                                               |                              | (6,563     | )                  |       |                   | (6,980     | )                         |       |      | (22,404    | )      |        |    | (22,107    | )      |        |    | (116,450 | )     
|Beneficial conversion feature on preferred stock              |                                               |                              |           |                    |       |                   |           |                           |       |      |           |        |        |    |           |        |        |    | (22,870  | )     
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |        |        
|Net loss attributable to common stockholders                  |                                               | ($                           | 6,563      | )                  |       | ($                | 6,980      | )                         |       | ($   | 22,404     | )      |        | ($ | 22,107     | )      |        | ($ | 139,320  | )     
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |        |        
|Basic and diluted net loss per share                          |                                               | ($                           | 0.20       | )                  |       | ($                | 0.24       | )                         |       | ($   | 0.74       | )      |        | ($ | 0.76       | )      |        |    |          |       
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |       
|Shares used in computing basic and diluted net loss per share |                                               |                              | 32,373,833 |                    |       |                   | 29,268,023 |                           |       |      | 30,408,455 |        |        |    | 29,234,243 |        |        |    |          |       
|                                                              |                                               |                              |            |                    |       |                   |            |                           |       |      |            |        |        |    |            |        |        |    |          |       

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

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




CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(Unaudited)



|                                                                                                        |                                |                          |         |       |           |       |        |         |         |            |       |       |             |              |                |   |   |  |     |   |     |  |                |         |   |  |       |   | 
|------------------------------------------------------------------------------------------------------- | ------------------------------ | ------------------------ | ------- | ----- | --------- | ----- | ------ | ------- | ------- | ---------- | ----- | ----- | ----------- | ------------ | -------------- | - | - |  | --- | - | --- |  | -------------- | ------- | - |  | ----- | - | 
|                                                                                                        |                                |                          |         |       |           |       |        |         |         |            |       |       |             |              |                |   |   |  |     |   |     |  | Accumulated    |         |   |  |      
|                                                                                                        |                                |                          |         |       |           |       |        |         |         |            |       |       |             |              |                |   |   |  |     |   |     |  | Deficit During |         |   |  |      
|                                                                                                        |                                |                          |         |       |           |       |        |         |         |            |       |       |             |              | Additional     |   |   |  |     |   | the |  |                |         |  
|                                                                                                        |                                |                          | Date of |       | Preferred |       | Common |         | Paid-In |            | Notes |       | Development |              | Deferred Stock
|In thousands, except share data                                                                         |                                | Transaction              |         | Stock |           | Stock |        | Capital |         | Receivable |       | Stage |             | Compensation
|                                                                                                        |                                |                          |         |       |           |       |        |         |         |            |       |       |             |             
|Balance  December 31, 2002                                                                             |                                |                          |         |       |           |       |       |         |         | $          | 29    |       |             | $            | 133,411        |   |   |  | ($3 | ) |     |  | ($94,046       | )       |   |  | ($589 | )
|Issuance of 262,436 shares of common
stock, net, upon exercise of options and under stock purchase plan |                                | January
2-
 September 12 |         |       |          |       |        |         |        |            |       |       | 1,358       |              |                |   |  |  |     |   |    |  |                |         |  | 
|Expense related to equity compensation                                                                  |                                | June 30                  |         |       |          |       |        |         |        |            |       |       | 69          |              |                |   |  |  |     |   |    |  |                |         |  | 
|Issuance of 4,000,000 shares of
common stock for public offering net
of $500,000 of offering expenses   |                                | August 1                 |         |       |          |       |        |         | 5       |            |       |       | 60,136      |              |                |   |  |  |     |   |    |  |                |         |  | 
|Issuance of 434,000 shares of common
stock for underwriters
over-allotment                             |                                | August 22                |         |       |          |       |        |         |        |            |       |       | 6,579       |              |                |   |  |  |     |   |    |  |                |         |  | 
|Issuance of 6,738 shares of common
stock for employer 401(k) match                                      |                                | September 15             |         |       |          |       |        |         |        |            |       |       | 124         |              |                |   |  |  |     |   |    |  |                |         |  | 
|Amortization of deferred stock
compensation                                                             |                                |                          |         |       |           |       |       |         |         |            |      |       |             |              |               |   |   |  |    |   |     |  |               |         |   |  | 441   |  
|Decrease in notes receivable                                                                            |                                |                          |         |       |           |       |       |         |         |            |      |       |             |              |               |   |   |  | 3   |   |     |  |               |         |   |  |      |  
|                                                                                                        | Net Loss                       |                          |         |       |           |       |        |        |         |            |       |      |             |              |                |  |   |  |     |  |     |  |                | (22,404 | ) |  |       |  | 
|                                                                                                        | Unrealized gain on investments |                          |         |       |           |       |        |        |         |            |       |      |             |              |                |  |   |  |     |  |     |  |                |        |   |  |       |  | 
|                                                                                                        |                                |                          |         |       |           |       |        |         |         |            |       |       |             |              |                |   |   |  |     |   |     |  |                |         |   |  |       |  
|                                                                                                        | Comprehensive loss             |                          |         |       |           |       |        |        |         |            |       |      |             |              |                |  |   |  |     |  |     |  |                |        |   |  |       |  | 
|Balance  September 30, 2003                                                                            |                                |                          |         |       |           |       |       |         |         | $          | 34    |       |             | $            | 201,677        |   |   |  |    |   |     |  | ($116,450      | )       |   |  | ($148 | )
|                                                                                                        |                                |                          |         |       |           |       |        |         |         |            |       |       |             |              |                |   |   |  |     |   |     |  |                |         |   |  |       |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                                                        |                                |               |               |        |               |      |               |         |   |  |  |          |  
|------------------------------------------------------------------------------------------------------- | ------------------------------ | ------------- | ------------- | ------ | ------------- | ---- | ------------- | ------- | - |  |  | -------- | -
|                                                                                                        |                                |               | Accumulated   |        |               |      |               |         |   |  | 
|                                                                                                        |                                |               | Other         |        | Total         |      |               |         |  
|                                                                                                        |                                |               | Comprehensive |        | Stockholders |      | Comprehensive
|In thousands, except share data                                                                         |                                | Income/(Loss) |               | Equity |               | Loss
|                                                                                                        |                                |               |               |        |               |     
|Balance  December 31, 2002                                                                             |                                |               | ($59          | )      |               | $    | 38,743        |         |   |  |  |         
|Issuance of 262,436 shares of common
stock, net, upon exercise of options and under stock purchase plan |                                |               |              |        |               |      | 1,358         |         |   |  |  |         
|Expense related to equity compensation                                                                  |                                |               |              |        |               |      | 69            |         |   |  |  |         
|Issuance of 4,000,000 shares of
common stock for public offering net
of $500,000 of offering expenses   |                                |               |              |        |               |      | 60,141        |         |   |  |  |         
|Issuance of 434,000 shares of common
stock for underwriters
over-allotment                             |                                |               |              |        |               |      | 6,579         |         |   |  |  |         
|Issuance of 6,738 shares of common
stock for employer 401(k) match                                      |                                |               |              |        |               |      | 124           |         |   |  |  |         
|Amortization of deferred stock
compensation                                                             |                                |               |              |        |               |      | 441           |         |   |  |  |         
|Decrease in notes receivable                                                                            |                                |               |              |        |               |      | 3             |         |   |  |  |         
|                                                                                                        | Net Loss                       |               |               |       |               |      |               | (22,404 | ) |  |  | ($22,404 | )
|                                                                                                        | Unrealized gain on investments |               |               | 4      |               |      |               | 4       |   |  |  | 4        |  
|                                                                                                        |                                |               |               |        |               |      |               |         |   |  |  |         
|                                                                                                        | Comprehensive loss             |               |               | 4      |               |      |               |         |   |  |  | ($22,400 | )
|                                                                                                        |                                |               |               |        |               |      |               |         |   |  |  |         
|Balance  September 30, 2003                                                                            |                                |               | ($55          | )      |               | $    | 85,058        |         |   |  |  |         
|                                                                                                        |                                |               |               |        |               |      |               |         |   |  |  |         

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

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ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |       |        |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------- | ---------------------------------------------------- | -------------------------- | ----------------------------------------- | --- | ----------------- | ------- | ------------- | ----- | ------ | ------- | --------- | ----- | ------ | ------- | -
|                                                     |                                                                             |                                                      |                            |                                           |     | Nine Months Ended |         | Inception to 
|                                                     |                                                                             |                                                      |                            |                                           |     | September 30,     |         | September 30,
|in thousands                                         |                                                                             | 2003                                                 |                            | 2002                                      |     | 2003             
|                                                     |                                                                             |                                                      |                            |                                           |     |                  
|Cash flows from operating activities:                |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |          
|                                                     | Net loss                                                                    |                                                      |                            | ($22,404                                  | )   |                   |         | ($22,107      | )     |        |         | ($116,450 | )    
|                                                     | Adjustments to reconcile net loss to net cash
used in operating activities: |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|                                                     |                                                                             | Purchased in-process research and development        |                            |                                           |    |                   |         |               |      |        |         |           | 4,000 |       
|                                                     |                                                                             | Depreciation and amortization                        |                            |                                           | 872 |                   |         |               | 1,021 |        |         |           | 5,685 |       
|                                                     |                                                                             | Stock-based compensation expense                     |                            |                                           | 441 |                   |         |               | 611   |        |         |           | 4,091 |       
|                                                     |                                                                             | Decrease in notes receivable                         |                            |                                           | 3   |                   |         |               | 9     |        |         |           | 126   |       
|                                                     |                                                                             | Loss on sale of property and equipment               |                            |                                           | 1   |                   |         |               | 170   |        |         |           | 192   |       
|                                                     |                                                                             | Non-cash interest expense included in long-term debt |                            |                                           | 365 |                   |         |               | 277   |        |         |           | 1,152 |       
|                                                     |                                                                             | Changes in assets and liabilities:                   |                            |                                           |     |                   |         |               |       |        |         |           |       |       
|                                                     |                                                                             |                                                      | Prepaid expenses and other |                                           |     | (1,018            | )       |               |       | 724    |         |           |       | (2,256 | )      
|                                                     |                                                                             |                                                      | Other assets               |                                           |     | 29                |         |               |       | (15    | )       |           |       | 549    |        
|                                                     |                                                                             |                                                      | Accounts payable           |                                           |     | (578              | )       |               |       | (1,431 | )       |           |       | 1,378  |        
|                                                     |                                                                             |                                                      | Accrued liabilities        |                                           |     | 2,063             |         |               |       | (208   | )       |           |       | 4,245  |        
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|                                                     |                                                                             |                                                      |                            | Net cash used in operating activities     |     |                   | (20,226 | )             |       |        | (20,949 | )         |       |        | (97,288 | )
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|Cash flows from investing activities:                |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |          
|                                                     | Purchases of property and equipment                                         |                                                      |                            | (354                                      | )   |                   |         | (715          | )     |        |         | (7,857    | )    
|                                                     | Acquisition of Talaria Therapeutics, Inc.                                   |                                                      |                            |                                          |     |                   |         |              |       |        |         | (233      | )    
|                                                     | Proceeds from sale of property and equipment                                |                                                      |                            |                                          |     |                   |         | 29            |       |        |         | 32        |      
|                                                     | Purchases of short-term investments                                         |                                                      |                            | (30,411                                   | )   |                   |         | (34,221       | )     |        |         | (67,626   | )    
|                                                     | Maturities of short-term investments                                        |                                                      |                            | 7,058                                     |     |                   |         | 25,861        |       |        |         | 39,919    |      
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|                                                     |                                                                             |                                                      |                            | Net cash used in investing activities     |     |                   | (23,707 | )             |       |        | (9,046  | )         |       |        | (35,765 | )
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|Cash flows from financing activities:                |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |          
|                                                     | Proceeds from issuance of convertible preferred stock                       |                                                      |                            |                                          |     |                   |         |              |       |        |         | 42,200    |      
|                                                     | Proceeds from issuance of common stock                                      |                                                      |                            | 68,147                                    |     |                   |         | 168           |       |        |         | 147,258   |      
|                                                     | Proceeds from long-term debt                                                |                                                      |                            |                                          |     |                   |         | 1,834         |       |        |         | 10,171    |      
|                                                     | Repayments of long-term debt                                                |                                                      |                            | (788                                      | )   |                   |         | (885          | )     |        |         | (3,585    | )    
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|                                                     |                                                                             |                                                      |                            | Net cash provided by financing activities |     |                   | 67,359  |               |       |        | 1,117   |           |       |        | 196,044 |  
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|Effect of exchange rate changes on cash              |                                                                             |                                                      | 760                        |                                           |     |                   | (22     | )             |       |        | 1,694   |          
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|Net increase (decrease) in cash and cash equivalents |                                                                             |                                                      | 24,186                     |                                           |     |                   | (28,900 | )             |       |        | 64,685  |          
|Cash and cash equivalents at beginning of period     |                                                                             |                                                      | 40,499                     |                                           |     |                   | 70,286  |               |       |        |        |          
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|Cash and cash equivalents at end of period           |                                                                             | $                                                    | 64,685                     |                                           |     | $                 | 41,386  |               |       | $      | 64,685  |          
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |           |      
|Supplemental disclosures of cash flow information:   |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |          
|                                                     |                                                                             | Cash paid during the period for interest             |                            | $                                         | 601 |                   |         | $             | 524   |        |         |           |       |       
|                                                     |                                                                             |                                                      |                            |                                           |     |                   |         |               |       |        |         |          

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

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

(1) Basis of Presentation

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

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

(2) Secondary Public Offering of Common Stock

In August 2003, the Company completed a public offering of 4.0 million
shares of its common stock at an offering price to the public of $16.00 per
share. Also in August 2003, an additional 434,000 shares were sold by the
Company to cover the underwriters over-allotment. The Company received gross
proceeds of approximately $70.9 million, of which approximately $3.7 million
was paid as an underwriting discount and approximately $500,000 was incurred as
offering expenses. The Company invested the aggregate net proceeds, in the
amount of approximately $66.7 million in investment-grade, interest-bearing
securities. These proceeds, as well as the proceeds from earlier offerings and
private placements, are being used to fund operations, for working capital and
for general corporate purposes, which may include capital expenditures,
clinical development, research and discovery, manufacturing and/or in-licensing
of technology.

(3) Change in Accounting Policy

Effective April 1, 2003, the Company changed the functional currency for
its foreign subsidiary from Swedish Kronor to U.S. Dollars. The change in
functional currency is based on the ramp-down of the operations of its foreign
subsidiary, the frequent intercompany transactions between the Company and the
subsidiary, the reliance by the subsidiary on the Company to service debt costs
and the limited number and amount of purchases and expenses denominated in
Swedish Kronor. Additionally, the Company determined that intercompany foreign
currency transactions were of a long-term investment nature, as settlement is
not anticipated in the foreseeable future. The change in accounting for
foreign operations results in the financial statements of Esperion AB, a
Swedish subsidiary, being translated using historic exchange rates or exchange
rates in effect at the end of a period for assets and liabilities of a
non-monetary and monetary nature, respectively, and at average rates, during
the period for results of operations. The resulting foreign currency
translation adjustment, excluding the impact of long-term intercompany
transactions, is reflected in other income (expense) on the accompanying
condensed consolidated statements of operations. The change in accounting
policy is reported prospectively from the date of change. The change resulted
in a decrease in accumulated other comprehensive loss of approximately $605,000
as of September 30, 2003 on the accompanying condensed consolidated balance
sheets, and an increase in other expense of approximately $220,000 and $605,000
on the accompanying condensed consolidated statements of operations during the
three and nine months ended September 30, 2003, respectively.

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(4)  Comprehensive Loss

Comprehensive loss is the total of net loss and all other non-owner
changes in equity. The difference between net loss, as reported in the
accompanying condensed consolidated statements of operations, and comprehensive
loss is the foreign currency translation adjustment for the respective periods
and unrealized gain (loss) on short-term investments for the respective
periods. Total comprehensive loss was $6.6 million and $7.0 million for the
three-month periods ended September 30, 2003 and 2002, respectively, and $22.4
million and $22.2 million, for the nine-month periods ended September 30, 2003
and 2002, respectively.

(5)  Stock-Based Compensation

The Company accounts for stock-based compensation to employees using the
intrinsic value method prescribed in Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25), and related
interpretations. Accordingly, compensation cost for stock options is measured
as the excess, if any, of the fair value of the Companys common stock as of
the date of the grant over the amount the employee must pay to acquire the
stock.

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

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

|                                                                                                                |                                       |   |                    |     |                   |   |        |     |      |   |         |     |  |   |         |     | 
|--------------------------------------------------------------------------------------------------------------- | ------------------------------------- | - | ------------------ | --- | ----------------- | - | ------ | --- | ---- | - | ------- | --- |  | - | ------- | --- | 
|                                                                                                                |                                       |   | Three Months Ended |     | Nine Months Ended
|                                                                                                                |                                       |   | September 30,      |     | September 30,    
|                                                                                                                |                                       |   |                    |     |                  
|                                                                                                                |                                       |   | 2003               |     | 2002              |   | 2003   |     | 2002
|                                                                                                                |                                       |   |                    |     |                   |   |        |     |     
|Net loss, as reported                                                                                           |                                       | $ | (6,563             | )   |                   | $ | (6,980 | )   |      | $ | (22,404 | )   |  | $ | (22,107 | )  
|                                                                                                                | Add: Stock-based compensation expense |   | $                  | 147 |                   |   | $      | 201 |      |   | $       | 441 |  |   | $       | 590 | 
|Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all
awards |                                       | $ | (1,236             | )   |                   | $ | (947   | )   |      | $ | (3,174  | )   |  | $ | (2,680  | )  
|Pro forma net loss                                                                                              |                                       | $ | (7,652             | )   |                   | $ | (7,726 | )   |      | $ | (25,137 | )   |  | $ | (24,197 | )  
|Basic and diluted net loss per share:                                                                           |                                       |   |                    |     |                   |   |        |     |      |   |         |     |  |   |         |    
|As reported                                                                                                     |                                       | $ | (0.20              | )   |                   | $ | (0.24  | )   |      | $ | (0.74   | )   |  | $ | (0.76   | )  
|Pro forma                                                                                                       |                                       | $ | (0.24              | )   |                   | $ | (0.26  | )   |      | $ | (0.83   | )   |  | $ | (0.83   | )  

The fair value of options was estimated at the date of grant using the
Black Scholes Single Option valuation method under SFAS No. 123 with the
following assumptions as of September 30, 2003 and 2002, respectively:
weighted-average risk free interest rate of 2.83% and 2.90%; dividend yield of
0%; volatility of 52.15% and 52.77%; and expected life of options of five
years. The weighted-average fair values of options granted during the three
months ended September 30, 2003 and 2002 were $8.32 and $2.57 per share,
respectively. The weighted-average fair values of options granted during the
nine months ended September 30, 2003 and 2002 were $4.35 and $2.76 per share,
respectively. Option valuation models require the input of highly subjective
assumptions. Because changes in subjective input assumptions can materially
affect the fair value estimate, in managements opinion, the calculated fair
value may not necessarily be indicative of the actual fair value of the stock
options.

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(6)  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 2,081,588 and 448,460 shares
of common stock for the three-month periods ended September 30, 2003 and 2002,
respectively, and 1,449,067 and 474,732 for the nine-month periods ended
September 30, 2003 and 2002, respectively, were not included in the calculation
of diluted net loss per share, as doing so would have been anti-dilutive. The
Company has an agreement whereby certain milestone payments can be satisfied by
issuing shares of the Companys common stock. The effect of any such payments
in stock has not been included in the calculation of diluted loss per share for
milestones in the agreement that have not yet been achieved.

(7)  Goodwill and Other Intangible Assets

Under Statement of Financial Accounting Standard No. 142, Goodwill and
Other Intangible Assets (SFAS No. 142), goodwill and certain
indefinite-lived intangible assets are no longer amortized, but are reviewed at
least annually for impairment by comparing the fair value to the carrying value
of net assets. The Company has not recognized any impairment losses since its
adoption of SFAS No. 142 on January 1, 2002.

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
carrying amount of goodwill is approximately $3.1 million as of September 30,
2003 and December 31, 2002. The assets acquired from Talaria relate to one of
the Companys ongoing development projects, ETC-588. This product candidate is
currently in Phase II clinical development for the treatment of cardiovascular
disease.

(8)  Commitments and Contingencies

The Company has entered into various agreements with third parties related
to the research and development activities of its existing product candidates
as well as discovery efforts on potential new product candidates. These
agreements include costs related to manufacturing, clinical trials and
toxicology or pharmacology studies performed by third parties. The estimated
amount that may be incurred in the future under these agreements totals
approximately $2.3 million as of September 30, 2003. The amount and timing of
these commitments may change, as they are largely dependent on the rate of
enrollment in and timing of the clinical trials.

The Company has entered into various license and other agreements with
third parties related to some of its products in development. The Company may,
in the future, 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 amount of $30.2 million. Some
of these payments may be fulfilled through the issuance of the Companys common
stock, at the Companys option. Upon reaching certain milestones, the payments
are charged to research and development expenses in the accompanying
consolidated statements of operations. During the second quarter of 2003, the
Company accrued for the first milestone under an agreement with Pharmacia
Corporation relating to certain apolipoprotein A-I Milano, or AIM, technology
that is payable upon completion of clinical trials showing preliminary safety
and initial proof-of-concept. As a result, the Company has included $1.0
million in accrued liabilities in the accompanying consolidated balance sheets
although no cash milestone payments were made during the first nine months of
2003. At the present time, the Company can give no assurances that any other
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 formulae in the agreements.

(9)  New Accounting Pronouncements

In May 2003, the Financial Accounting Standards Board (FASB) issued SFAS
No. 150, Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity (SFAS 150). SFAS 150 established standards for
how companies should classify and measure certain financial instruments with
characteristics of both liabilities and equity. SFAS 150 requires certain
financial instruments to be classified as

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liabilities, which were previously
classified as equity. SFAS 150 is effective for financial instruments entered
into or modified after May 31, 2003. The adoption of this statement did not have
an impact on the Companys consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation addresses the requirements
for business enterprises to consolidate related entities in which they are
determined to be the primary beneficiary as a result of their variable economic
interest. The interpretation is intended to provide guidance in judging
multiple economic interests in an entity and in determining the primary
beneficiary. The interpretation outlines disclosure requirements for Variable
Interest Entities in existence prior to January 31, 2003, and outlines
consolidation requirements for Variable Interest Entities created after January
31, 2003. This interpretation is not expected to have an impact on the
Companys consolidated financial statements.

(10)  Other Events

On July 25, 2003, the Company was informed that Scott Sacane, Durus
Capital Management, LLC and Durus Capital Management (N.A.), LLC (together, the
Sacane Group) had become the beneficial owners of almost 33% of the Companys
then outstanding common stock. The Sacane Group is the Companys largest
stockholder and, on July 29, 2003, filed a Schedule 13D that reported that it
owned 9,726,900 shares of the Companys common stock. In addition, the
Schedule 13D reported purchases and sales of common stock in the open market
between September 3, 2003 and July 24, 2003. The Sacane Group had not
disclosed to the Company any changes in its beneficial ownership after November
8, 2002 until July 25, 2003, nor had it reported those changes to the SEC in a
timely manner in accordance with federal securities laws.

Upon the Companys receipt of the information about the increase in the
beneficial ownership by the Sacane Group, and, after consideration of the facts
and circumstances, the Company determined that it was in the best interests of
our stockholders to enter into an agreement with the Sacane Group relating to
its holdings of common stock of the Company. As part of this agreement, which
was filed by the Company as an exhibit to a Current Report on Form 8-K on July
29, 2003, the Sacane Group agreed not to acquire beneficial ownership of more
than 33% of the Companys common stock and not to sell any shares of the
Companys common stock before October 29, 2003. The Sacane Group agreed that
any sales of any common stock would be subject to certain volume restrictions
until the amount it beneficially owned was less than 20%. The Sacane Group
also agreed to certain voting restrictions, which generally require than any
shares it beneficially owns that represent more than 20% of the Companys
outstanding voting securities be voted in proportion to the votes cast by all
of our stockholders other than the Sacane Group. The Company amended its
stockholder rights agreement (Rights Agreement) to provide that the Sacane
Group would not be an Acquiring Person under the Rights Agreement unless and
until the earlier of such time as the Sacane Group, directly or indirectly,
becomes the beneficial owner of more than 33% of the Companys outstanding
common stock or ceases to hold any of the common stock of which it is the
beneficial owner without any intention of changing or influencing control of
the Company. As a result of the Companys issuance of approximately 4.4
million shares in its August 2003 public offering of its common stock, the
Sacane Group now holds approximately 29% of the Companys outstanding common
stock. In connection with this offering, the Sacane Group agreed not to sell
any shares of the Companys common stock before January 31, 2004.

On August 25, 2003, the Company filed a complaint in the U.S. District
Court for the District of Connecticut to recover short-swing profits under
Section 16(b) of the Exchange Act and to obtain other relief from the Sacane
Group and the Durus Life Sciences Master Fund, Ltd. (the Master Fund),
through which the Sacane Group beneficially owned a large amount of
its shares. The Company had been informed on July 29, 2003 that the Sacane
Group acknowledged its liability under Section 16(b) of the Exchange Act.
Since that time, the Company has been in discussions with, and is in the
process of seeking to resolve the claims against, the Master Fund. On October
30, 2003, the Master Fund filed a Schedule 13D that reported, among other
things, that the Master Fund was in discussions with the Company. The Company
is also responding to an SEC subpoena and an inquiry by the Nasdaq relating to
an investigation of the activities of the Sacane Group and trading in its
shares.

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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, require, intend,
assume and similar expressions. Forward-looking statements speak only as of
the date of this filing, reflect managements current expectations, estimations
and projections and involve certain factors, such as risks and uncertainties,
that may cause our actual results, performance or achievements to be far
different from those suggested by our forward-looking statements. These factors
include, but are not limited to, risks associated with: our ability to
successfully execute our business strategies, including entering into strategic
partnerships or other transactions; the progress and cost of development of our
product candidates; the extent and timing of market acceptance of new products
developed by us or by our competitors; our 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; our
dependence on licensing arrangements and other strategic relationships with
third parties; clinical trials; manufacturing; our dependence on patents and
proprietary rights; litigation, proceedings, investigations and other
disruptions of managements time resulting from the acquisition of our common
stock by the various persons associated with Scott Sacane; the procurement,
maintenance, enforcement and defense of our patents and proprietary rights;
competitive conditions in the industry; business cycles affecting the markets
in which any of our future products may be sold; extraordinary events and
transactions; seeking and consummating business acquisitions, including the
diversion of managements attention to the assimilation of the operations and
personnel of any acquired business; the timing and extent of our financing
needs and our access to funding, including through the equity market,
particularly in light of the impact on the market value of our common stock of
matters outside of our control, such as trading activities by third parties;
fluctuations in foreign exchange rates; and economic conditions generally or in
various geographic areas. Because all of the foregoing factors are difficult to
forecast, you should not place undue reliance on any forward-looking statement.
More detailed information about some of these and other factors is set forth in
our Annual Report on Form 10-K for the year ended December 31, 2002, our
prospectus for the August 2003 public offering 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 our
forward-looking statements other than as required under the federal securities
laws.

Overview

Background

We are a development stage biopharmaceutical company and have not
generated any revenues from any source, including from product sales. We have
devoted substantially all of our resources since we began our operations in May
1998 to the research and development of product candidates for the treatment of
cardiovascular disease. We have incurred a cumulative net loss of approximately
$116.5 million from inception (May 18, 1998) through September 30, 2003. 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, until we generate sufficient revenue to offset expenses, which will only
occur if our product candidates are approved by the FDA and we begin
commercialization of our product candidates, or we generate revenues through
licensing arrangements. We expect that research and development costs relating to product
candidates will increase in future periods. Manufacturing, sales and marketing
costs will be incurred and will increase in preparation for the intended
commercialization of our product candidates. Until we generate positive cash
flow, we plan to finance our operations with our existing cash balance,
additional equity or debt offerings and/or payments from potential strategic
relationships that we may enter into with partners in the future.

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Results of Operations

|                           |            |      |                                  |      |                                 |          |       |      |   |      |       |          |  |   |        |      |   |   |        |      |   |  |      |   | 
|-------------------------- | ---------- | ---- | -------------------------------- | ---- | ------------------------------- | -------- | ----- | ---- | - | ---- | ----- | -------- |  | - | ------ | ---- | - | - | ------ | ---- | - |  | ---- | - | 
|                           |            |      | Three Months Ended September 30, |      | Nine Months Ended September 30,
|                           |            |      |                                  |      |                                
|dollars in thousands       |            | 2003 |                                  | 2002 |                                 | % Change |       | 2003 |   | 2002 |       | % Change
|                           |            |      |                                  |      |                                 |          |       |      |   |      |       |         
|Research and development   |            | $    | 4,473                            |      |                                 | $        | 5,416 |      |   |      | -17.4 | %        |  | $ | 16,204 |      |   | $ | 16,999 |      |   |  | -4.7 | %
|                           | % of total |      |                                  | 71.9 | %                               |          |       | 76.4 | % |      |       |          |  |   |        | 76.6 | % |   |        | 78.2 | % |  |      |   | 
|General and administrative |            | $    | 1,748                            |      |                                 | $        | 1,677 |      |   |      | 4.2   | %        |  | $ | 4,938  |      |   | $ | 4,750  |      |   |  | 4.0  | %
|                           | % of total |      |                                  | 28.1 | %                               |          |       | 23.6 | % |      |       |          |  |   |        | 23.4 | % |   |        | 21.8 | % |  |      |   | 

Three Months Ended September 30, 2003 and 2002

Research and Development Expenses.Research and development expenses
include both internal and external costs related to the research and
development activities for our existing product candidates, as well as
discovery efforts on potential new product candidates. External costs include
costs related to manufacturing, process development, 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.

Research and development expenses decreased by 17.4% to approximately $4.5
million for the three months ended September 30, 2003 compared to approximately
$5.4 million for the three months ended September 30, 2002. This 17.4%
decrease in research and development expenses is primarily attributable to
lower production costs for ETC-642. During the three months ended September 30,
2002, we incurred production costs for ETC-642 in preparation for Phase I
clinical trials; we did not incur similar costs during the three months ended
September 30, 2003. The decrease is partially offset by an increase in clinical
trial costs for three of our product candidates that were in active clinical
trials during the three months ended September 30, 2003, including ETC-588 (two
Phase II trials), ETC-642 (two Phase I trials) and ETC-1001 (one Phase I
trial). During the three months ended September 30, 2002, the Company had
three ongoing clinical trials, including a Phase II trial of each of the
Companys ETC-216 and ETC-588 product candidates and a Phase I trial of the
Companys ETC-642 product candidate.

The magnitude of our operating expenses, particularly research and
development expense, is largely dependent upon the progress, number, timing,
nature and size of clinical trials. As clinical trials continue to progress, we
anticipate 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 need for later stage clinical trials that
generally require more patients.

General and Administrative Expenses.General and administrative expenses
included the cost of salaries, employee benefits, and other costs associated
with our finance, accounting, human resources, legal, business development,
administrative and executive management functions, as well as an allocation of
overhead expenses. General and administrative expenses increased by 4.2% to
approximately $1.7 million for the three months ended September 30, 2003
compared to the three months ended September 30, 2002. This increase resulted
primarily from higher legal costs related to the litigation with the Sacane
Group and the Durus Life Sciences Master Fund, Ltd. As
of September 30, 2003 and 2002, we had 25 and 24 employees, respectively,
who were engaged in general and administrative activities.

Other Income (Expense).Other income (expense) consists of interest
income, interest expense, foreign currency translation gain (loss), foreign
currency transaction gain (loss), and other non-operating income and expenses.
Interest income decreased to approximately $191,000 for the three months ended
September 30, 2003 compared to

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approximately $258,000 for the three months
ended September 30, 2002. The decrease is primarily attributable to lower
yields on our invested assets in 2003 compared to the same period in 2002.
Interest expense for the three months ended September 30, 2003 and 2002 was
approximately $331,000 and $289,000, 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
2003 as compared to the same period in 2002.

During the three months ended September 30, 2003, we recorded
approximately $241,000 of foreign currency losses compared to approximately
$34,000 of foreign currency gains for the three months ended September 30,
2002. These foreign currency gains (losses) result from assets and liabilities
denominated in foreign currencies, primarily the Swedish Kronor and the Euro.
As the exchange rate between the U.S. Dollar and these currencies fluctuates,
we record a corresponding gain (loss). During the third quarter of 2003, the
U.S. Dollar has generally weakened against these foreign currencies, resulting
in these unrealized losses, whereas the reverse was true in the third quarter
of 2002. Effective April 1, 2003, we changed the functional currency for our
foreign subsidiary from Swedish Kronor to U.S. Dollars. The change in
accounting policy is reported prospectively from the date of change and
resulted in a decrease in accumulated other comprehensive loss of approximately
$605,000 as of September 30, 3003 on the accompanying condensed balance sheets,
and an increase in other expense of approximately $220,000 on the accompanying
condensed consolidated statements of operations during the three months ended
September 30, 2003.

Net Loss.Our net loss was approximately $6.6 million for the three
months ended September 30, 2003 compared to approximately $7.0 million for the
three months ended September 30, 2002. The decrease in net loss resulted from
the decrease in operating expenses, offset in part by the decrease in interest
income, the increase in interest expense and the increase in foreign currency
losses.

Nine Months Ended September 30, 2003 and 2002

Research and Development Expenses.Research and development expenses
decreased by 4.7% to approximately $16.2 million for the nine months ended
September 30, 2003 compared to approximately $17.0 million for the nine months
ended September 30, 2002. This decrease in research and development expenses
is primarily attributable to lower production costs for ETC-642. During the
nine months ended September 30, 2002, we incurred production costs for ETC-642
in preparation for Phase I clinical trials; we did not incur similar costs
during the nine months ended September 30, 2003. The decrease is largely
offset by an increase in clinical trial costs for three of our product
candidates that were in active clinical trials during the nine months ended
September 30, 2003, including ETC-216 (one Phase II trial), ETC-588 (two Phase
II trials), ETC-642 (two Phase I trials) and ETC-1001 (one Phase I trial).
During the nine months ended September 30, 2002, the Company had four on going
clinical trials including ETC-216 (one Phase II trial), ETC-588 (two Phase II
trials), ETC-642 (one Phase I trial). Also, offsetting the decrease in
research and development expenses is the accrual of a $1.0 million expense in
2003 relating to the first milestone under our agreement with Pharmacia
Corporation relating to certain AIM technology. The milestone is payable upon
completion of clinical trials showing preliminary safety and initial
proof-of-concept.

General and Administrative Expenses.General and administrative expenses
increased by 4.0% to approximately $4.9 million for the nine months ended
September 30, 2003 compared to approximately $4.8 million for the nine months
ended September 30, 2002. This increase resulted from higher payroll and
related internal and overhead costs in support of advanced stages of research
and development for certain of our product candidates as well as higher legal
costs related to the litigation with the Sacane Group and the Durus Life
Sciences Master Fund, Ltd as compared to the nine months ended September 30,
2002. As of September 30, 2003 and 2002, we had 25 and 24 employees,
respectively, who were engaged in general and administrative activities.

Other Income (Expense).Interest income decreased to approximately
$440,000 for the nine months ended September 30, 2003 compared to approximately
$862,000 for the nine months ended September 30, 2002. The decrease is
primarily attributable to lower cash levels combined with lower yields on our
invested assets in 2003 compared to the same period in 2002. Interest expense
for the nine months ended September 30, 2003 and 2002 was approximately
$960,000 and $819,000, respectively, and represents interest incurred on
equipment financing

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facilities and a special project loan. The increase in
interest expense resulted from higher outstanding borrowings in 2003 as
compared to the same period in 2002.

During the nine months ended September 30, 2003, we recorded approximately
$786,000 of foreign currency losses compared to approximately $401,000 of
foreign currency losses for the nine months ended September 30, 2002. These
foreign currency losses result from assets and liabilities denominated in
foreign currencies, primarily the Swedish Kronor and the Euro. As the exchange
rate between the U.S. Dollar and these currencies fluctuates, we record a
corresponding gain (loss). During the first nine months of 2003 and 2002, the
U.S. Dollar has generally weakened against these foreign currencies, resulting
in these unrealized losses. Effective April 1, 2003, we changed the functional
currency for our foreign subsidiary from Swedish Kronor to U.S. Dollars. The
change in accounting policy is reported prospectively from the date of change
and resulted in a decrease in accumulated other comprehensive loss of
approximately $605,000 as of September 30, 2003 on the accompanying condensed
balance sheets and an increase in other expense of approximately $605,000 on
the accompanying condensed consolidated statements of operations during the
three months ended September 30, 2003.

Net Loss.Our net loss was approximately $22.4 million for the nine
months ended September 30, 2003 compared to approximately $22.1 million for the
nine months ended September 30, 2002. The increase in net loss resulted from
the decrease in interest income, the increase in interest expense and the
increase in foreign currency losses, offset in part by the decrease in
operating expenses.

Liquidity and Capital Resources

As of September 30, 2003 and 2002, we had cash, cash equivalents and
short-term investments of approximately $92.4 million and $49.7 million,
respectively. Our investment policy emphasizes liquidity and preservation of
principal over other portfolio considerations. We select investments that
maximize interest income while investing cash in investment-grade,
interest-bearing securities with maturities that support our ongoing cash needs
for operations.

In August 2003, we completed a public offering of approximately 4.4
million shares of our common stock, raising net proceeds of approximately $66.7
million. We believe that our current cash position will be sufficient to fund
our currently planned operations, capital expenditures and debt service at
least until the end of 2005.

During the nine months ended September 30, 2003 and 2002, net cash used in
operating activities was approximately $20.2 million and $21.0 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 was approximately $23.7 million and
$9.0 million for the nine months ended September 30, 2003 and September 30,
2002, respectively. The net cash used in investing activities for the nine
months ended September 30, 2003 and September 30, 2002 resulted primarily from
the purchases of short-term investments and capital expenditures offset, in
part, by the maturities of short-term investments.

Net cash provided by financing activities was approximately $67.4 and $1.1
million for the nine months ended September 30, 2003. The net cash proceeds
from financing activities for the nine months ended September 30, 2003 resulted
primarily from a follow-on stock offering and the issuance of common stock to
employees under our equity compensation plans. These net cash proceeds were
partially offset by $788,000 of cash used to repay borrowings under equipment
loans. The net cash proceeds from financing activities for the nine months
ended September 30, 2002 resulted primarily from $1.8 million of additional
borrowings on a special project loan and equipment term loans, and $168,000
received from the issuance of common stock to employees under our equity
compensation plans. These net cash proceeds were partially offset by $885,000
of cash used to repay borrowings under equipment loans.

We frequently 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

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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 amounts or on terms acceptable to us, if at all.

As of September 30, 2003, we had the following credit facilities and
outstanding borrowings:



| |  |  | A credit facility with a U.S. bank to finance purchases of equipment
that is pledged as collateral: Borrowings under this facility bear
interest at the banks prime rate (4.0% at September 30, 2003).
Borrowings outstanding under this facility as of September 30, 2003
amounted to approximately $770,000 and must be repaid by May 2006. No
additional borrowings are allowed. The terms of this credit facility
obligate us to maintain a minimum tangible net worth of $9.0 million and
invest a minimum of $10.0 million with the U.S. bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | A credit facility with a U.S. lending institution to finance
purchases of equipment that is pledged as collateral: Approximately
$744,000 was outstanding under this facility at a weighted-average
interest rate of 12% as of September 30, 2003. Outstanding amounts under
this facility must be repaid by November 2004, and no additional
borrowings are allowed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | A credit facility with a Swedish entity totaling 50 million Swedish
Kronor ($6.5 million as of September 30, 2003): The proceeds from this
facility may only be used to fund the development of our ETC-216 (AIM)
product candidate. If results achieved by the AIM project show that the
product candidate is not commercially feasible, our obligation to repay
the loan plus a portion of accrued interest 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 10.5 million
Swedish Kronor ($1.4 million), amounted to 55.5 million Swedish Kronor
($7.2 million) as of September 30, 2003. We have been in discussions
with the Swedish entity regarding the principal amount of 5.0 million
Swedish Kronor remaining under the facility, disbursement of which is
related to completion of the final milestone under the facility. The
milestone was achieved in June 2003; however, the funds may be
unavailable to us due to the ramp down of operations in Sweden during
2002. A condition under the credit facility is that the project be
principally carried out in Sweden.
|
| |  |  | An agreement with a Michigan non-profit corporation whereby we
borrowed $447,000 for equipment purchases, pledged as collateral, at an
interest rate of 4%. As of September 30, 2003, outstanding borrowings
under this arrangement totaled $447,000 and must be repaid by November
2008. As required by the agreement, we will begin making principal
payments in August 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Effective
October 8, 2003 we entered into a credit facility with a U.S. bank to finance
purchases of equipment that is pledged as collateral. Total borrowings
available under this facility are $750,000 and bear interest at the greater of
5% or the banks prime rate plus 1.75% (5.75% at September 30, 2003). There
were no borrowings outstanding under this facility as of September 30, 2003.
The terms of this credit facility obligate us to maintain a minimum tangible
net worth of $9.0 million and invest a minimum of $10.0 million with the U.S.
bank.

We anticipate that our capital expenditures for the next twelve months
will be approximately $1.0 million. We expect that these expenditures will
primarily relate to lab and computer equipment as well as leasehold
improvements.

We lease our corporate and research and development facilities under
operating leases expiring beginning between December 2003 and June 2006.
Total minimum future payments under these leases for the next twelve months are
approximately $496,000 as of September 30, 2003.

We have entered into license and other agreements with certain third
parties that require us to make payments upon achievement of the milestones set
forth in such agreements. The remaining payments that we could be obligated to
make under those agreements could over time amount to up to $30.2 million. Some
of these payments

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may be fulfilled through the issuance of common stock, at our option.
During the second quarter of 2003, we accrued $1.0 million for the first
milestone payment under an agreement with Pharmacia Corporation relating to
certain AIM technology that is payable upon completion of clinical trials
showing preliminary safety and initial proof-of-concept. There were no
milestone payments actually made under any of the license or other agreements
during the first nine months of 2003. If we sell products using technology
under the agreements, we would be obligated to make royalty payments to the
third parties pursuant to formulae in the agreements. There can be no assurance
that we will achieve any or all of the milestones in, or sell any products
requiring royalty payments under, these agreements.

We expect to incur an increase in legal fees and expenses primarily
related to certain matters between the Company and its largest stockholder.
These legal expenses, which totaled approximately $200,000 for the three and nine months
ended September 30, 2003, are included in general and administrative expense.
In addition, we expect that other operating expenses and capital expenditures
will increase in future periods. We intend to hire additional research and
development, clinical 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
capabilities, 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.

Income Taxes

As of September 30, 2003, we had net operating loss carryforwards of
approximately $78.3 million. These net operating loss carryforwards expire
beginning in 2013. In addition, we have $22.7 million of start-up costs that
will be used to offset future taxable income. 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 the realizability of these assets is not likely at this
time.

Employees

As of September 30, 2003, we had 69 full-time employees. Of these
employees, 44 were engaged in research, pre-clinical and clinical development,
regulatory affairs and/or manufacturing activities and 25 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 our Consolidated Financial Statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. 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. We
regularly review our 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.

We believe that the following critical accounting policies are affected by
significant judgments and estimates used in the preparation of our consolidated
financial statements:

We review goodwill and other intangible long-lived assets for impairment
annually or sooner if events or changes in circumstances indicate that the
carrying amount may not be recoverable. Events or changes in circumstances
that indicate the carrying amount may not be recoverable include, but are not
limited to, a significant decrease in the market value of the business and
asset acquired, a significant adverse change in the extent or manner in which
the business or asset acquired is used or a significant adverse change in the
business climate. If any such event or change in circumstances is present, the
fair value of a reporting unit is compared
with its carrying amount, including

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goodwill. If the fair value of a
reporting unit exceeds its carrying amount, goodwill of the reporting unit is
not considered impaired. If the carrying amount of a reporting unit exceeds
its fair value, the amount of impairment will be measured in accordance with
the guidance of SFAS 142. All of our goodwill was assigned to a single
reporting unit, which is our sole operating segment.

We record 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 toxicology and pharmacology studies.
These contracts generally have terms ranging from approximately two months to
approximately two years. Expenses are recorded as the work under each contract
is completed, and we may record an accrued liability or prepaid expense on our
Consolidated Balance Sheet, depending on the payment terms under each contract.
As of September 30, 2003, we had total potential obligations of approximately
$12.2 million under contracts accounted for on the percentage of completion
basis. We estimate that approximately $9.8 million of the contract obligations
had been incurred and expensed through September 30, 2003 and approximately
$1.2 million is included in accrued liabilities in the accompanying balance
sheet for expenses under contracts on a percentage of completion basis.




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 and limiting our exposure to
any one security. 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 September 30, 2003.
Declines in interest rates reduce our interest income as described on page 12
in Managements Discussion and Analysis, under the subcaptions Three Months
Ended September 30, 2003 and 2002, Other Income (Expense) and Nine Months
Ended September 30, 2003 and 2002, Other Income (Expense), while increases in
interest rates increase our interest expense.

The functional currency for our foreign operation is the U.S. Dollar. As
such, changes in exchange rates between the Swedish Kronor and the U.S. Dollar
could adversely affect our future net income (loss). Given the level of
activity we currently have with our foreign operations, we consider this
exposure to be minimal. A 10% change in exchange rates would not have a
significant impact on our future net income (loss). Additionally, at September
30, 2003, we had approximately $7.2 million in long-term debt denominated in
Swedish Kronor for which changes in the exchange rate will result in foreign
currency transaction gains or losses that are charged to Other income (expense)
in the accompanying Statements of Operations.




Item 4. Controls and Procedures

(a)  Evaluation of Disclosure Controls and Procedures

Certain members of the Companys management, with the participation of the
Companys Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the Companys disclosure controls and procedures as of the end
of the period covered by this report. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer, concluded that the Companys
disclosure controls and procedures as of the end of the period covered by this
report were designed and functioning effectively to provide reasonable
assurance that the information required to be disclosed by the Company in
reports filed under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the SECs rules
and forms. The Company believes that a controls system, no matter how well
designed and operated, cannot provide absolute assurance that the objectives of
the controls system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within a
company have been detected.

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(b)  Change in Internal Control over Financial Reporting

No change in the Companys internal control over financial reporting
occurred during the Companys most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Companys internal
control over financial reporting.




PART II - OTHER INFORMATION




Item 1. Legal Proceedings

On August 25, 2003, the Company filed a complaint in the U.S. District
Court for the District of Connecticut to recover short-swing profits under
Section 16(b) of the Exchange Act and to obtain other relief from Scott Sacane,
Durus Capital Management, LLC and Durus Capital Management (N.A), LLC
(together, the Sacane Group) and the Durus Life Sciences Master Fund, Ltd.
(the Master Fund), through which the Sacane Group allegedly beneficially
owned a large amount of its shares. The Company had been informed on July 29,
2003 that the Sacane Group acknowledged its liability under Section 16(b) of
the Exchange Act. Since that time, the Company has been in discussions with,
and is in the process of seeking to resolve the claims against, the Master
Fund. On October 30, 2003, the Master Fund filed a Schedule 13D that reported,
among other things, that the Master Fund was in discussions with the Company.
The Company is also responding to an SEC subpoena and an inquiry by the Nasdaq
relating to an investigation of the activities of the Sacane Group and trading
in its shares.




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

Not applicable.




Item 5. Other Information

Not applicable.

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Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

|       |  |                                                                                                                                                                                                                                                                                                            
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Exhibit                                                                                                                                                                                                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                            
|4.4    |  | Amendment No. 2 to Rights Agreement, dated as of July 29, 2003,
between Esperion Therapeutics, Inc. and StockTrans, Inc., as Rights
Agent. Incorporated by reference to Exhibit 4.4 to the Companys
Current Report on Form 8-K filed July 29, 2003.                                                       
|       |  |                                                                                                                                                                                                                                                                                                            
|4.5    |  | Voting and Transfer Restriction Agreement by and among Esperion
Therapeutics, Inc., Scott Sacane, Durus Capital Management LLC and
Durus Capital Management (NA), LLC, dated as of July 29, 2003.
Incorporated by reference to Exhibit 4.5 to the Companys Current
Report on Form 8-K filed July 29, 2003.
|       |  |                                                                                                                                                                                                                                                                                                            
|10.59* |  | Esperion Therapeutics, Inc. 2000 Equity Compensation Plan (Amended
and Restated, effective September 23, 2003).                                                                                                                                                                                            
|       |  |                                                                                                                                                                                                                                                                                                            
|10.60  |  | Loan and Security Agreement between Silicon Valley Bank and
Esperion Therapeutics, Inc. dated effective October 8, 2003.                                                                                                                                                                                   
|       |  |                                                                                                                                                                                                                                                                                                            
|31.1   |  | Certification pursuant to Rules 13a-14 (a) or 15d-14 (a)
promulgated under the Securities Exchange
Act of 1934, as amended.                                                                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                            
|31.2   |  | Certification pursuant to Rules 13a-14 (a) or 15d-14 (a)
promulgated under the Securities Exchange
Act of 1934, as amended.                                                                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                            
|32.1   |  | Certification pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                                                                            
|32.2   |  | Certification pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                                                                            
|*      |  | Compensation plan in which directors and
executive officers are eligible to participate.                                                                                                                                                                                                                   

(b) Reports on Form 8-K

A report on Form 8-K was filed on July 29, 2003 under Item 5, Other Events
and Item 7, Financial Statements and Exhibits.

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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: November 10, 2003 |  |     |  | 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)

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INDEX TO EXHIBITS

|       |  |                                                                                                                                                                                                                                                                                                            
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Exhibit                                                                                                                                                                                                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                            
|4.4    |  | Amendment No. 2 to Rights Agreement, dated as of July 29, 2003,
between Esperion Therapeutics, Inc. and StockTrans, Inc., as Rights
Agent. Incorporated by reference to Exhibit 4.4 to the Companys
Current Report on Form 8-K filed July 29, 2003.                                                       
|       |  |                                                                                                                                                                                                                                                                                                            
|4.5    |  | Voting and Transfer Restriction Agreement by and among Esperion
Therapeutics, Inc., Scott Sacane, Durus Capital Management LLC and
Durus Capital Management (NA), LLC, dated as of July 29, 2003.
Incorporated by reference to Exhibit 4.5 to the Companys Current
Report on Form 8-K filed July 29, 2003.
|       |  |                                                                                                                                                                                                                                                                                                            
|10.59* |  | Esperion Therapeutics, Inc. 2000 Equity Compensation Plan (Amended
and Restated, effective September 23, 2003).                                                                                                                                                                                            
|       |  |                                                                                                                                                                                                                                                                                                            
|10.60  |  | Loan and Security Agreement between Silicon Valley Bank and
Esperion Therapeutics, Inc. dated effective October 8, 2003.                                                                                                                                                                                   
|       |  |                                                                                                                                                                                                                                                                                                            
|31.1   |  | Certification pursuant to Rules 13a-14 (a) or 15d-14 (a)
promulgated under the Securities Exchange
Act of 1934, as amended.                                                                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                            
|31.2   |  | Certification pursuant to Rules 13a-14 (a) or 15d-14 (a)
promulgated under the Securities Exchange
Act of 1934, as amended.                                                                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                            
|32.1   |  | Certification pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                                                                            
|32.2   |  | Certification pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                                                                            
|*      |  | Compensation plan in which directors and
executive officers are eligible to participate.                                                                                                                                                                                                                   

21