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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):
March 7, 2007
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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 March 7, 2007, the Registrant issued a press release
announcing its financial results for the full year and fourth
quarter ended December 31, 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 March 7, 2007.
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 7, 2007 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 March 7, 2007
Exhibit 99.1
A.P. Pharma Logo
News Release
A.P. PHARMA REPORTS RESULTS FOR THE FOURTH QUARTER
AND FULL YEAR 2006; REPORTS ON PROGRESS OF APF530 PROGRAM
REDWOOD CITY, Calif. (March 7, 2007) - A.P. Pharma, Inc. (NASDAQ:
APPA), a specialty pharmaceutical company, today reported financial
results for its fourth quarter and full year ended December 31,
2006.
Highlights
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* APF530 Development:
- Patient enrollment rates steady and lead to an NDA filing in
2008
- Most patients are electing to proceed with multiple cycles of
treatment
- Extended timeline for filing NDA
- Held successful Clinical Investigators meeting
- To date, APF530 appears to be safe and well tolerated.
* Hired Vice President of Clinical Development
* Granted exclusive license to market APF530 in China
* Cash, cash equivalents and marketable securities $15.5 million at
year-end; financing avenues being explored.
Results of Operations
- ---------------------
Operating loss: As a result of recording no revenue in 2006 because
of the sale effective October 2005 of our rights to receive
royalties, and increased research and development costs ("R&D") for
the development of APF530, our operating loss for the fourth quarter
widened to $5.7 million from $2.7 million. On a full year basis,
our operating loss was $18.9 million vs. $8.5 million in 2005. The
$10.4 million increase primarily reflects an increase in R&D of $5.0
million and $5.4 million in royalty revenue received in 2005 for
sales of Retin-A-Micro(R) and Carac(R), the rights to which we sold
effective October 2005. The increases in R&D for the current
periods reflect the increased costs associated with our Phase 3
study for APF530, compared with the Phase 2 costs incurred last
year.
Net income (loss): As a net result of the aforementioned items and
smaller non-operating items, our net loss for the fourth quarter was
$5.7 million or 22 cents per share, versus a net loss of $2.6
million or 10 cents a share in the prior year's fourth quarter. For
the full year, a one time gain of $23.4 million on the sale of our
right to receive royalties recorded in the current year's first
quarter exceeded our operating and non-operating costs, resulting in
our reporting net income of $5.3 million or 21 cents a share.
Absent that one time credit, we would have had a net loss of $18.0
million or 71 cents per share compared with a net loss of $8.2
million or 33 cents per share in 2005. (All references to per share
are to diluted amounts)
Operations Update
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In December we announced that because of the extended timeline for
patient enrollment, we now expect to file the New Drug Application
(NDA) for APF530 in 2008. Currently APF530 is in Phase 3 clinical
trials, with more than 80% of the planned 80 clinical sites for the
trial now active, following the closure of several previously
established sites that were deemed nonproductive. Patient
enrollment in the trial continues at a steady pace. We recently
completed a clinical investigators' meeting to address the
complexity of our study and to stimulate patient enrollment. Over
80% of the sites were represented. We believe that one of the
outcomes of this meeting will be enhanced involvement and enthusiasm
of participating centers, which will lead to improved patient
enrollment rates.
In November we announced that Anastassios D. Retzios, Ph.D. had
joined the Company in the newly created position of Vice President
of Clinical Development. Dr. Retzios brings more than 18 years of
experience in a wide range of clinical and regulatory matters. His
primary objective is to ensure the successful completion of the
APF530 clinical trial program.
In October, 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 biotechnology companies to
expedite global development timelines and extend market entry into
China.
We are continuing to pursue additional financing to complete our
phase 3 trial, to support other ongoing business requirements, and
to pursue other business opportunities.
About APF530
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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 endpoints 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 number1063348. 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.
Income Statement Highlights
(in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
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Royalties $ 0 $ 1,444 $ 0 $ 5,247
Contract Revenues 0 0 0 144
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Total Revenues 0 1,444 0 5,391
Operating Expenses:
Research & Development 4,792 3,094 15,236 10,299
General & Administrative 934 1,025 3,628 3,565
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Total Operating Expenses 5,726 4,119 18,864 13,864
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Operating Loss (5,726) (2,675) (18,864) (8,473)
Interest Income 213 62 1,006 287
Gain on Sale of Interest
in Royalties 0 0 23,429 0
Other Income (Expense) 6 7 (54) 3
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Income (Loss) from
Continuing Operations (5,507) (2,606) 5,517 (8,183)
Loss from Discontinued
Operations (59) (17) (188) (89)
Gain on Disposition of
Discontinued Operations 18 20 56 62
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Income (Loss) before Income Taxes (5,548) (2,603) 5,385 (8,210)
Income Tax Expense (119) 0 (119) 0
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Net income (Loss) ($5,667) ($2,603) $5,266 ($8,210)
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Earnings (Loss) Per Common Share:
Income (Loss) from
Continuing Operations ($0.22) ($0.10) $ 0.22 ($0.33)
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Net Income (Loss) ($0.22) ($0.10) $0.21 ($0.33)
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Shares used in Calculating
Earnings (Loss) Per Share: 25,307 25,187 25,434 25,118
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A.P. PHARMA, INC.
Balance Sheet Highlights
(in thousands)
December 31, 2006 December 31, 2005
(Unaudited) (1)
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Assets
Cash, Cash Equivalents and
Marketable Securities $ 15,522 $ 5,809
Accounts Receivable, Net 75 1,519
Other Current Assets 609 320
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Total Current Assets 16,206 7,648
Property & Equipment, Net 958 1,164
Other Non-Current Assets 87 157
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Total Assets $ 17,251 $ 8,969
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Liabilities and Stockholders' Equity
Total Liabilities $ 5,192 $ 2,766
Stockholders' Equity 12,059 6,203
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Total Liabilities and Stockholders'
Equity $ 17,251 $ 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.