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UNITED STATES
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): August 8, 2006
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A.P. Pharma, Inc.
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(Exact name of registrant as specified in its charter)
000-16109
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(Commission File Number)
Delaware 94-2875566
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
123 Saginaw Drive
Redwood City, CA 94063
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(Address of principal executive offices, with zip code)
(650) 366-2626
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General
Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2.02 Results of Operations and Financial Condition
On August 8, 2006, the Registrant issued a press release
announcing its financial results for the second quarter ended
June 30, 2006. 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 August 8, 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: August 8, 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 August 8, 2006
Exhibit 99.1
A.P. Pharma Logo
News Release
A.P. PHARMA REPORTS 2006 SECOND QUARTER RESULTS
- Phase 3 Clinical Trial for APF530 Underway -
REDWOOD CITY, Calif. (August 8, 2006) - A.P. Pharma, Inc. (NasdaqGM:
APPA), a specialty pharmaceutical company, today reported financial
results for the three months ended June 30, 2006.
Clinical and Financial Highlights
- ---------------------------------
APF530 Development:
* Phase 3 clinical trial protocol approved by FDA and governing IRB.
* Clinical sites actively being recruited and initiated.
* Cancer patients being enrolled and treated; patients now at
multiple cycles.
* Preliminary efficacy data targeted for release in the first
quarter of 2007.
* Quantitative and qualitative market assessment confirms
significant potential for APF530 at targeted profile.
Cash, cash equivalents and marketable securities as of June 30, 2006
were $21.7 million.
Financial Results
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No royalty revenues were recorded for the second quarter of 2006,
compared with $1,187,000 in royalty revenues for the second quarter
of the prior year, as effective October 1, 2005 A.P. Pharma
completed the sale of its interest in royalties on sales of Retin-A
Micro(R) and Carac(R). The Company recorded no contract revenues
during the second quarter of 2006, compared with $63,000 in the
prior-year second quarter.
Research and development expense was $3,856,000 for the second
quarter of 2006, an increase of 25% compared with $3,078,000 in the
prior-year second quarter. Higher research and development expense
in the second quarter of 2006 reflects the initiation of the Phase 3
clinical trial for APF530.
General and administrative expense was $933,000 for the second
quarter of 2006, an increase of 13% compared with $823,000 in the
prior-year second quarter, due primarily to increased consulting
fees.
The loss from continuing operations was $4,516,000 for the second
quarter of 2006, compared with a loss from continuing operations of
$2,564,000 in the prior-year second quarter. The net loss for the
second quarter of 2006 was $4,550,000, or $0.18 per share, compared
with a net loss for the second quarter of 2005 of $2,608,000, or
$0.10 per share.
Cash, cash equivalents and marketable securities totaled $21,672,000
as of June 30, 2006.
Clinical Update
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During the second quarter of 2006, the Company initiated a Phase 3
clinical trial using APF530, its product candidate for the
prevention of chemotherapy-induced nausea and vomiting (CINV) in
patients undergoing either moderately or highly emetogenic
chemotherapy. Clinical sites are currently being initiated and have
started to enroll and treat patients, some for multiple cycles. The
trial is being conducted in the U.S., and preliminary clinical
results are expected to be released in the first quarter of 2007.
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.
Analysis of efficacy data from the open-label Phase 2 study for the
two doses entering the Phase 3 trial indicated that the percentage
of complete responders in the group receiving moderately emetogenic
chemotherapy was 100% in the acute phase and 92% in the delayed
phase. In the group receiving highly emetogenic chemotherapy, the
percentage of complete responders was 86% in the acute phase and 85%
in the delayed phase. "Complete response" was defined as no emetic
episodes and no use of rescue medication.
The Phase 3 trial will involve a total of approximately 1,350
patients with approximately half receiving moderately emetogenic
chemotherapeutic agents in one group and approximately half
receiving highly emetogenic chemotherapeutic agents in another
group. In each group there will initially be three arms of
approximately 225 patients each; two arms will be treated with
APF530, high and low dose form, and a third arm will be treated with
the currently approved dose of palonosetron (brand name ALOXI(R)).
APF530 contains the 5HT3 antagonist anti-nausea drug granisetron
formulated with the Company's proprietary Biochronomer(TM) drug
delivery system.
Market Assessment
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A qualitative and quantitative market assessment conducted by an
independent research company has confirmed the significance of the
market potential for APF530 at its targeted profile. By achieving
the clinical end points of the Phase 3 trial in the management of
acute and especially delayed onset nausea and vomiting, which is the
head-to-head trial against Aloxi, APF530 has the potential to have
significant adoption rates in many oncology practices. Over 90% of
the physicians reporting in the survey would use APF530 at least
some of the time with highly emetogenic chemotherapy, and over 80%
of physicians reporting would use it some of the time with
moderately emetogenic chemotherapy.
Conference Call
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Management will be hosting an investment-community conference call
today beginning at 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
to discuss the financial results, to 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 from outside the U.S. A
telephone replay will be available for 48 hours by dialing (800)
642-1687 from the U.S. or (706) 645-9291 from outside the U.S., and
entering reservation number 3289882.
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, anti-
inflammation 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 intend to revise these forward-looking statements to
reflect events or circumstances occurring in the future.
Investor Relations Contacts: Company Contact:
Lippert/Heilshorn & Associates Gordon Sangster
Zack 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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
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Royalties $ 0 $ 1,187 $ 0 $ 2,469
Contract Revenues 0 63 0 142
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Total Revenues 0 1,250 0 2,611
Operating Expenses:
Research & Development 3,856 3,078 7,325 4,900
General & Administrative 933 823 1,865 1,672
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Total Operating Expenses 4,789 3,901 9,190 6,572
Operating Loss (4,789) (2,651) (9,190) (3,961)
Interest Income, Net 280 74 542 146
Gain on Sale of Interest in
Royalties 8 0 23,429 0
Other Income (Expense) (15) 13 (5) 1
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Income (Loss) from
Continuing Operations (4,516) (2,564) 14,776 (3,814)
Loss from Discontinued
Operations (50) (45) (50) (63)
Gain on Disposition of
Discontinued Operations 16 1 23 13
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Net Income (Loss) $(4,550) $(2,608) $14,749 $(3,864)
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Basic Earnings (Loss) Per
Common Share:
Income (Loss) from
Continuing Operations $ (0.18) $ (0.10) $ 0.59 $ (0.15)
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Net Income (Loss) $ (0.18) $ (0.10) $ 0.58 $ (0.15)
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Diluted Earnings (Loss)
Per Common Share:
Income (Loss) from
Continuing Operations $ (0.18) $ (0.10) $ 0.58 $ (0.15)
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Net Income (Loss) $ (0.18) $ (0.10) $ 0.58 $ (0.15)
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Shares Used in Calculating
Earnings(Loss) Per Share:
Basic 25,254 25,107 25,230 25,073
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Diluted 25,254 25,107 25,379 25,073
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A.P. PHARMA, INC.
Balance Sheet Highlights
(in thousands)
June 30, 2006 December 31, 2005(1)
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(Unaudited)
Assets
Cash, Cash Equivalents and
Marketable Securities $21,672 $ 5,809
Accounts Receivable, Net 75 1,519
Other Current Assets 607 320
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Total Current Assets 22,354 7,648
Property & Equipment, Net 1,020 1,164
Other Non-Current Assets 122 157
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Total Assets $23,496 $ 8,969
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Liabilities and Stockholders' Equity
Current Liabilities $ 2,301 $ 2,766
Stockholders' Equity 21,195 6,203
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Total Liabilities and Stockholders' Equity $23,496 $ 8,969
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(1) Derived from our audited financial statements for the year ended December 31,
2005 included in the Company's 2005 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.