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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):
November 7, 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 November 7, 2006, the Registrant issued a press release
announcing its financial results for the third quarter ended
September 30, 2006. The press release is attached 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 November 7, 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: November 7, 2006 By: /S/ Stephen C. Whiteford
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Stephen C. Whiteford
Vice President, Finance
and Chief Financial
Officer
EXHIBIT INDEX
99.1 Press release dated November 7, 2006
Exhibit 99.1
A.P. Pharma Logo
News Release
A.P. PHARMA REPORTS 2006 THIRD QUARTER RESULTS
REDWOOD CITY, Calif. (November 7, 2006) - A.P. Pharma, Inc. (Nasdaq:
APPA), a specialty pharmaceutical company, today reported financial
results for the three months ended September 30, 2006.
Highlights:
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APF530 Development:
* Clinical sites continue to be actively recruited and initiated.
* Patients afflicted with various types of cancer being enrolled and
treated.
* Some patients have now completed multiple cycles of treatment.
* Close monitoring of all phases of site selection and patient
enrollment continues.
* Preliminary efficacy data now targeted for release in the second
half of 2007.
Cash, cash equivalents and marketable securities $18.1 million;
financing avenues being explored.
Granted exclusive license to market AP530 in China.
Results of Operations:
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We recorded no revenue in the third quarter, reflecting the sale
effective October 1, 2005, of our rights to receive royalties on
sales of Retin-A Micro(R) and Carac(R). In the third quarter of the
prior year, we recorded royalty revenue of $1.3 million associated
with sales of these products.
Research and development expense totaled $3.1 million, an increase
of 35% over the $2.3 million reported in last year's third quarter.
The increase reflects the higher cost levels associated with our
Phase 3 study for APF530 versus those incurred for its Phase 2 study
last year.
General and administrative expense of $830,000 was 4% below the
$868,000 reported for the comparable period last year.
As a net result of the abovementioned items and smaller non-
operating items, our net loss for the third quarter was $3.8 million
or 15 cents per share, versus a net loss of $1.7 million or seven
cents per share for the prior year's third quarter.
Clinical Update
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On September 28, 2006, we announced that we expect to have initial
data from our Phase 3 clinical trial with APF530 in the second half
of 2007. The revised timing is due to a slower-than-expected start
in getting IRB approvals and clinical sites prepared to begin
enrolling patients, and in recruiting patients during the summer
months. The revised timeline assumes that there is only a modest
improvement in the current patient enrollment rate. Based on the
typical experience in this type of trial we anticipate an
acceleration in patient enrollment as the study progresses.
Currently, over fifty percent of the planned 80 clinical sites for
this complex double blind study are now open for enrollment. All of
these sites have received IRB approval and all necessary materials
and study drug; and have completed site initiation visits and
training. At certain sites which were the first to enroll patients,
a number of those patients have received multiple cycles of
treatment. We are closely monitoring this situation as the study
progresses.
On October 2, 2006, along with RHEI Pharmaceuticals, Inc. we
announced that we had granted an exclusive license to RHEI
Pharmaceuticals to develop and sell APF530 in Greater China. While
specific license terms were not disclosed, the agreement included an
upfront payment to A.P. Pharma and includes provisions for milestone
payments and double digit percentage royalties on future net sales.
Based in New Haven, Conn., RHEI is a specialty pharmaceutical
company that acquires, licenses, develops and commercializes
therapies in China. RHEI partners with pharmaceutical and biotech
companies to expedite global development timelines and extend market
entry to China.
We are continuing to pursue additional opportunities for partnering
the development of APF530 prior to completion of the Phase 3 trials.
Additionally, in order to support ongoing business requirements, we
are exploring financing options.
About APF530 and the Phase 3 Program
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APF530, which contains the 5HT3 antagonist anti-nausea drug
granisetron formulated with the Company's proprietary
Biochronomer(TM) bioerodible drug delivery system, is being
developed for the prevention of acute and delayed chemotherapy-
induced nausea and vomiting (CINV) in patients undergoing either
moderately or highly emetogenic chemotherapy for cancer. No other
5HT3 antagonist is currently approved for the prevention of both
acute and delayed CINV for both moderately and highly emetogenic
chemotherapy.
The APF530 Phase 3 pivotal trial protocol includes approximately
1,350 patients, with approximately 675 patients receiving moderately
emetogenic chemotherapy agents in one group and approximately 675
patients 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)).
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.
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. More than
90% of the physicians reporting in the survey indicated that they
would use APF530 at least some of the time with highly emetogenic
chemotherapy, and more than 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 9268982. The call will also be
broadcast live on A.P. Pharma's website, www.appharma.com. A replay
will be available on there 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(TM). 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.
Biochronomer(TM) is a trademark owned by A.P. Pharma, Inc.
ALOXI(R) is a registered trademark owned by Helsinn Healthcare, SA
(Switzerland)
Retin-A Micro(R) is a registered trademark owned by Johnson &
Johnson.
Carac(R) is a registered trademark owned by sanofi-aventis U.S. LLC
Forward-looking Statements
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This news release contains "forward-looking statements" as defined
by the Private Securities Reform Act of 1995. These forward-looking
statements involve risks and uncertainties including uncertainties
associated with timely development, approval, launch and acceptance
of new products, satisfactory completion of clinical studies,
establishment of new corporate alliances, progress in research and
development programs and other risks and uncertainties identified in
the Company's filings with the Securities and Exchange Commission.
We caution investors that forward-looking statements reflect our
analysis only on their stated date. We do not intend to update them
except as required by law.
Investor Relations Contacts: Company Contact:
Lippert/Heilshorn & Associates Stephen C. Whiteford
Zack Bryant (zbryant@lhai.com) Vice President, Finance and
Don Markley (dmarkley@lhai.com) Chief Financial Officer
Bruce Voss (bvoss@lhai.com) (650) 366-2626
(310) 691-7100
(Financial tables follow)
A.P. Pharma, Inc.
Statement of Operations Highlights
(in thousands, except per share data)
(Unaudited)
Assets
Cash, Cash Equivalents and
Marketable Securities $18,073 $ 5,809
Accounts Receivable, Net 75 1,519
Other Current Assets 743 320
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Total Current Assets 18,891 7,648
Property, Plant & Equipment, Net 953 1,164
Other Non-Current Assets 105 157
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Total Assets $19,949 $ 8,969
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Liabilities and Shareholders' Equity
Current Liabilities $ 2,419 $ 2,766
Shareholders' Equity 17,530 6,203
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Total Liabilities and Shareholders' Equity $19,949 $ 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.