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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 15, 2006
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A.P. PHARMA, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 1-16109 94-2875566
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
123 SAGINAW DRIVE, REDWOOD CITY, CALIFORNIA 94063
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(650) 366-2626
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2.02 Results of Operations and Financial Condition
On March 15, 2006, the Registrant issued a press release
announcing its financial results for the full year and fourth
quarter ended December 31, 2005. The press release is attached
hereto as Exhibit 99.1.
The information in this Current Report on Form 8-K, including
the exhibit, is furnished pursuant to Item 2.02 and shall not be
deemed "filed" for the purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the
liabilities under that Section. Furthermore, the information in
the Current Report on Form 8-K, including the exhibit, shall not
be deemed to be incorporated by reference into the filings of the
Company under the Securities Act of 1933, as amended.
ITEM 9.01 Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated March 15, 2006.
SIGNATURE
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 hereunto duly authorized.
A.P. PHARMA, INC.
Date: March 15, 2006 By: /S/ Michael O'Connell
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Michael P. J. O'Connell,
President and Chief
Executive Officer
EXHIBIT INDEX
99.1 Press release dated March 15, 2006.
(continued from previous page)
Exhibit 99.1
A.P. Pharma Logo
News Release
A.P. PHARMA REPORTS 2005 FULL YEAR AND FOURTH QUARTER RESULTS
APF530 Phase 3 Clinical Trial Planning at Advanced Stage,
Patient Enrollment Expected to Begin in April
REDWOOD CITY, Calif. (March 15, 2006) - A.P. Pharma, Inc. (NASDAQ NM:
APPA), a specialty pharmaceutical company, today reported financial
results for the year and three months ended December 31, 2005.
Recent and Financial Highlights
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* APF530 for the prevention of acute and delayed chemotherapy-
induced nausea and vomiting (CINV) in patients undergoing
moderately and highly emetogenic chemotherapy:
o Held end of Phase 2 meeting with U.S. Food and Drug
Administration (FDA).
o Submitted Phase 3 pivotal trial protocol to the FDA.
o Making preparations to initiate Phase 3 clinical trial in April.
* Cash, cash equivalents and marketable securities:
o Totaled $5.8 million as of December 31, 2005.
o Received $25 million in January 2006 from the sale of the
Company's interest in royalties from Retin-A Micro(R) and
Carac(R).
* Nasdaq National Market System:
o Maintained compliance with listing requirements.
Financial Results
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Royalties in 2005 were $5,247,000, an increase of $275,000 or 6%
compared with $4,972,000 in 2004. Contract revenues in 2005 were
$144,000, a decrease of $288,000 or 67% from $432,000 in 2004 as the
Company's resources were focused on APF530. Total revenues in 2005
were $5,391,000, a decrease of $13,000 or less than 1% compared with
$5,404,000 in 2004.
Royalties in the fourth quarter of 2005 were $1,444,000, a decrease
of $13,000 or 1% compared with $1,457,000 in the fourth quarter of
2004. There were no contract revenues in the fourth quarter of 2005,
compared with $25,000 in the fourth quarter of 2004 reflecting the
company's focus on APF530. Total revenues in the fourth quarter of
2005 were $1,444,000, a decrease of $38,000 or 3% compared with
$1,482,000 in the fourth quarter for 2004, due mainly to a decrease
in contract revenues.
Research and development expense in 2005 was $10,299,000, a decrease
of $1,196,000 or 10% from $11,495,000 in 2004, due mainly to the
higher clinical trial expenses and cost of toxicology studies
incurred in 2004, compared with 2005. Research and development
expense in the fourth quarter of 2005 was $3,094,000, an increase of
$39,000 or 1% compared with $3,055,000 in the fourth quarter of the
prior year. The increase is primarily attributable to the cost of
the Phase 2 clinical study for APF530 and preparations for the Phase
3 trial.
General and administrative expense in 2005 was $3,565,000, an
increase of $340,000 or 11% from $3,225,000 in 2004. General and
administrative expense in the fourth quarter of 2005 was $1,025,000,
an increase of $260,000 or 34% from $765,000 in the fourth quarter of
2004. Each of these increases was due mainly to the expenses
associated with the Company's financing activities.
The loss from continuing operations in 2005 was $8,183,000, compared
with $9,092,000 in 2004. The loss from continuing operations in the
fourth quarter of 2005 was $2,606,000, compared with $2,263,000 in
the fourth quarter of 2004. The net loss in 2005 was $8,210,000 or
$0.33 per share, compared with $9,221,000 or $0.40 per share in 2004.
The net loss in the fourth quarter of 2005 was $2,603,000 or $0.10
per share, compared with $2,257,000 or $0.09 per share in the fourth
quarter of 2004.
APF530 Clinical Update
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APF530, which contains the anti-nausea drug granisetron formulated
with the Company's proprietary Biochronomer(TM) bioerodible drug
delivery system, is being developed for the prevention of both acute
and delayed CINV in patients receiving either moderately or highly
emetogenic chemotherapy. Following the end of Phase 2 meeting held
with the FDA, the Company submitted a protocol to the Agency in order
to initiate a single pivotal Phase 3 clinical trial, which will
compare the safety and efficacy of APF530 with palonosetron,
currently marketed under the brand ALOXI(R).
The proposed Phase 3 pivotal trial protocol design includes
approximately 1,200 patients comprised of two groups, including
roughly equal numbers of those receiving either moderately or highly
emetogenic chemotherapeutic agents. In each group, there will be
three arms of approximately 200 patients each, treated with APF530
containing 5 milligrams or 10 milligrams of granisetron, which will
be compared with the currently approved dose of palonosetron. The
study's primary endpoint is to establish the efficacy of APF530 for
the prevention of acute onset (first 24 hours) and delayed onset (4-5
days) CINV in patients receiving either moderately or highly
emetogenic chemotherapy. No other 5HT3 antagonist is currently
approved for the prevention of both acute and delayed CINV for both
moderately and highly emetogenic chemotherapy.
An evaluation of clinical sites that will participate in the study
has been initiated. Enrollment of patients is expected to commence
in April once final ratification is received from the FDA on the
pivotal trial protocol, and is expected to take approximately eight
to nine months.
If the pivotal trial of APF530 successfully meets its clinical
endpoints, the Company plans to submit a New Drug Application (NDA)
with the FDA under Section 505(b)(2) of the Federal Food, Drug and
Cosmetic Act.
Conference Call
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Management will be hosting an investment community conference call
beginning at 11:00 a.m. Eastern time (8:00 a.m. Pacific time) today
to discuss the financial results, provide a business update and to
answer questions.
To participate in the live call by telephone, please dial (888) 803-
8275 from the U.S., or (706) 634-1287 for international callers. A
telephone replay will be available for 48 hours by dialing (800) 642-
1687 from the U.S., or (706) 645-9291 for international callers, and
entering reservation number 6187384.
Individuals interested in listening to the conference call via the
Internet may do so by visiting www.appharma.com. A replay will be
available on the Company's Web site for 30 days.
About A.P. Pharma
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A.P. Pharma is a specialty pharmaceutical company focused on the
development of ethical (prescription) pharmaceuticals utilizing its
proprietary polymer-based drug delivery systems. The Company's
primary focus is the development and commercialization of its
bioerodible injectable and implantable systems under the trade name
Biochronomer. Initial target areas of application for the Company's
drug delivery technology include anti-nausea, pain management and
DNA/RNAI applications. For further information visit the Company's
web site at www.appharma.com.
Forward-looking Statements
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Except for historical information, this news release contains certain
forward-looking statements that involve risks and uncertainties
including, among others, uncertainty associated with timely
development, approval, launch and acceptance of new products,
satisfactory completion of clinical studies, establishment of new
corporate alliances and progress in research and development
programs. Other risks and uncertainties associated with the
Company's business and prospects are identified in the Company's
filings with the Securities and Exchange Commission. The Company
does not undertake to revise these forward-looking statements to
reflect events or circumstances occurring in the future.
Investor Relations Contacts: Company Contact:
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Lippert/Heilshorn & Associates Gordon Sangster
Zachary Bryant (zbryant@lhai.com) Chief Financial Officer
Don Markley (dmarkley@lhai.com) (650) 366-2626
Bruce Voss (bvoss@lhai.com)
(310) 691-7100
(Financial tables follow)
A.P. PHARMA, INC.
Statement of Operations Highlights
(in thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004(1)
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Royalties $ 1,444 $ 1,457 $ 5,247 $ 4,972
Contract Revenues 0 25 144 432
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Total Revenues 1,444 1,482 5,391 5,404
Operating Expenses:
Research & Development 3,094 3,055 10,299 11,495
General & Administrative 1,025 765 3,565 3,225
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Total Operating Expenses 4,119 3,820 13,864 14,720
Operating Loss (2,675) (2,338) (8,473) (9,316)
Interest and Other, Net 69 75 290 224
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Loss from Continuing Operations (2,606) (2,263) (8,183) (9,092)
Gain (Loss) on Disposition of
Discontinued Operations 3 6 (27) (129)
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Net Loss $(2,603) $(2,257) $(8,210) $(9,221)
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Basic and Diluted Loss Per Share:
Loss from Continuing Operations $ (0.10) $ (0.09) $ (0.33) $ (0.40)
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Net Loss $ (0.10) $ (0.09) $ (0.33) $ (0.40)
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Shares Used in Calculating Loss
Per Share:
Basic and Diluted 25,157 25,000 25,118 22,909
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A.P. PHARMA, INC.
Balance Sheet Highlights
(in thousands)
December 31, December 31,
2005 2004(1)
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Assets
Cash, Cash Equivalents and
Marketable Securities $ 5,809 $13,596
Accounts Receivable, Net 1,519 1,506
Other Current Assets 320 394
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Total Current Assets 7,648 15,496
Property & Equipment, Net 1,164 1,235
Other Non-Current Assets 157 283
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Total Assets $ 8,969 $17,014
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Liabilities and Stockholders' Equity
Current Liabilities $ 2,766 $ 2,860
Stockholders' Equity 6,203 14,154
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Total Liabilities and Stockholders' Equity $ 8,969 $17,014
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(1) Derived from our audited financial statements for the year ended December 31,
2004 included in the Company's 2004 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
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