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 1,
2007
A.P.
Pharma, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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000-16109
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94-2875566
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(State
or other jurisdiction
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(Commission
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(I.R.S.
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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123
Saginaw Drive
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Redwood
City CA
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94063
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(Address
of prinicipal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code (650)
366-2626
N/A
(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)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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INFORMATION
TO BE INCLUDED IN THE REPORT
ITEM
2.02 Results of Operations and Financial Condition
On
August
1, 2007, the Registrant issued a press release announcing its financial results
for the second quarter ended June 30, 2007. 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 August 1, 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.
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A.P.
Pharma, Inc.
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Date:
August 1, 2007
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/S/
Michael O’Connell
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Michael
O’Connell
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Chief
Financial Officer and Chief Operating
Officer
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EXHIBIT
INDEX
99.1 Press
release dated August 1, 2007
Exhibit
99.1
News
Release
A.P.
PHARMA REPORTS SECOND QUARTER FINANCIAL RESULTS
REDWOOD
CITY, Calif. (August 1, 2007) – A.P. Pharma, Inc. (NASDAQ: APPA), a
specialty pharmaceutical company, today reported financial results for its
second quarter ended June 30, 2007.
Highlights
Financial:
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·
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$40
million equity financing ($37.5 million net of expenses) successfully
completed
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·
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Sufficient
capital to complete APF530 clinical trial and initiate new clinical
programs
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·
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New
shareholders include premier healthcare
investors
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·
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Financing
preceded by 1:4 reverse stock split
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·
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$2.5
million milestone payment received
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·
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Cash,
cash equivalents and marketable securities $45.1 million as of June
30,
2007
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·
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NASDAQ
confirms Company in compliance with the Global Market continued listing
requirements
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APF530:
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·
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Patient
enrollment at active sites continues at a steady
rate
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·
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New
U.S. and international clinical sites being established to replace
non-productive sites
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·
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Target
continues to be filing NDA in late
2008
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Results
of Operations
Our
net
loss for the second quarter was significantly reduced this quarter to $1.8
million, or $0.19 per share, compared with a $4.6 million net loss, or $0.72
per
share, for the second quarter of 2006. Our loss was lower largely as a result
of
receipt of a $2.5 million milestone payment related to the sale of our rights
to
receive royalties from two former products, Retin-A Micro® and
Carac®.
Total
operating expense in the second quarter of 2007 was reduced to $4.6 million,
compared with $4.8 million in the second quarter of 2006, despite a more active
clinical program. The improvement was the result of aggressive cost-containment
measures enacted pending the planned refinancing program. Research and
development costs for the quarter declined 2% to $3.8 million, compared with
$3.9 million in the second quarter of 2006. General and administrative costs
declined 7% to $0.9 million. The operating loss for the second quarter of 2007
of $4.5 million was further reduced by the recognition of contract revenues
following the initiation of a new development program utilizing our proprietary
Biochronomer™ technology with a major animal healthcare company.
Operations
Update
On
June
19, 2007, we completed a public offering of 24,393,939 shares, which included
3,181,818 shares sold pursuant to the full exercise of an over-allotment option
granted to the underwriters. The offering was preceded by a 1:4 reverse common
stock split implemented in late May. Net proceeds received by the Company were
approximately $37.5 million. With these funds, we are now able to focus on
the
key elements of our strategy, namely:
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·
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Maximize
the value of our lead product, APF530, by completing the current
Phase 3
clinical trial and pursuing partnering with successful trial
results
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·
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Initiate,
develop and undertake additional clinical trials for other product
candidates
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·
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Expand
our product pipeline by leveraging our existing
technology
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·
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Enter
into strategic partnerships and collaborations for future product
development programs
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Currently,
APF530 is in a pivotal Phase 3 clinical trial and patient enrollment in the
active U.S. sites continues at a steady rate. As we replace non-productive
clinical sites we plan to include a certain number of international sites in
addition to new U.S. sites. We expect to complete patient enrollment in our
APF530 trial in the first half of 2008 and to announce results of that trial
in
the third quarter of 2008. We expect to file our new drug application
(NDA) for approval of APF530 in the fourth quarter of 2008.
Additionally,
with our new cash resources we are now in a position to re-activate and expand
our product development programs, namely for APF112 and APF580. APF112 is
targeted to provide extended post-surgical pain relief; we intend to complete
additional preclinical work in 2007 followed by the initiation of a Phase 2b
trial in the first half of 2008. APF580, incorporating an opiate, is designed
to
provide analgesia lasting up to seven days via a single injection. We plan
to
initiate and complete a Phase 1 study in the first half of 2008 and initiate
a
Phase 2 study by the end of the year.
About
APF530
Our
lead
product candidate using our proprietary Biochronomer™ technology is APF530,
which contains granisetron, a drug approved for the prevention of
chemotherapy-induced nausea and vomiting (CINV). We selected
granisetron because it is a potent drug that blocks a specific receptor found
in
the gut that is responsible for triggering CINV. Additionally, the
applicable granisetron U.S. patent will expire on December 29,
2007. APF530 is designed to provide at least five days prevention of
CINV. In September 2005, we completed a Phase 2 human clinical trial
of APF530 that achieved all of its primary and secondary
endpoints. In May 2006, we initiated our pivotal Phase 3 clinical
trial of AFP530. We believe that this clinical trial will lead to regulatory
approval of APF530 for the prevention of acute and delayed onset CINV for
patients undergoing both moderately and highly emetogenic, or vomit-inducing,
chemotherapy.
Our
pivotal Phase 3 clinical trial, initiated in May 2006, is a multi-center,
randomized, observer-blind, actively-controlled, double-dummy, parallel group
study that will compare the efficacy of APF530 with Aloxi®. The trial will
include approximately 1,350 patients, stratified in two groups, one receiving
moderately and the other receiving highly emetogenic chemotherapeutic agents.
In
each group, the patients are randomized to receive in the first chemotherapy
treatment cycle either APF530 high dose (10 mg), APF530 low dose (5 mg) or
the
currently approved dose of Aloxi. In subsequent treatment cycles (up to three
additional cycles), the patients are re-randomized to either of the two APF530
doses.
Conference
call
Management
will host 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
10905888. The call will also be broadcast live on A.P. Pharma’s
website, www.appharma.com. A replay will be available for 30
days.
About
A.P. Pharma
We
are a
specialty pharmaceutical company focused on developing pharmaceutical products
using our proprietary Biochronomer polymer-based drug delivery technology.
Our
product development philosophy is based on incorporating approved therapeutics
into our proprietary bioerodible drug delivery technology to create controlled
release pharmaceuticals to improve treatments for diseases or conditions. Our
lead product candidate, APF530, is currently in a pivotal Phase 3 clinical
trial
for the prevention of acute and delayed onset chemotherapy-induced nausea and
vomiting, or CINV.
Our
primary focus is to advance our proprietary Biochronomer technology, consisting
of bioerodible polymers designed to release drugs over a defined period. We
have
completed more than 100 in vivo and in vitro studies demonstrating that our
Biochronomer technology is potentially applicable to a range of therapeutic
areas, including pain management, prevention of nausea and vomiting, control
of
inflammation and treatment of ophthalmic diseases. We have also completed
comprehensive animal and human toxicology studies that have established that
our
Biochronomer polymers are safe and well tolerated. Furthermore, our Biochronomer
technology can be designed to deliver drugs over periods varying from days
to
several months.
Forward-looking
Statements
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.
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Investor
Relations Contacts:
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Company
Contacts:
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Lippert/Heilshorn
& Associates
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Gregory
Turnbull
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Don
Markley (dmarkley@lhai.com)
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President
and Chief Executive Officer
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(310)
691-7100
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(650)
366-2626
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Michael
O’Connell
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Chief
Financial Officer and
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Chief
Operating Officer
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(650)
366-2626
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(Financial
tables follow)
A.P.
PHARMA, INC.
Statements
of Operations Highlights
(in
thousands, except per share data)
(Unaudited)
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Three
Months Ended
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Six
Months Ended
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|||||||
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June
30,
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June
30,
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June
30,
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June
30,
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|||||
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2007
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2006
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2007
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2006
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Royalties
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$0
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$0
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$0
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$0
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Contract
Revenues
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160
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0
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160
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0
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Total
Revenues
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160
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0
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160
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0
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Operating
Expenses:
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Research
& Development
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3,763
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3,856
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8,749
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7,325
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General
& Administrative
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872
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933
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1,991
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1,865
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Total
Operating Expenses
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4,635
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4,789
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10,740
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9,190
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Operating
Loss
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(4,475)
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(4,789)
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(10,580)
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(9,190)
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Interest
Income, Net
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156
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280
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304
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542
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Gain
on Sale of Interest in Royalties
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2,500
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8
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2,500
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23,429
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Other
Income (Expense)
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3
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(15)
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3
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(5)
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Income
(Loss) from Continuing Operations
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(1,816)
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(4,516)
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(7,773)
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14,776
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Income
(Loss) from Discontinued Operations
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39
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(50)
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15
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(50)
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Gain
on Disposition of Discontinued Operations
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1
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16
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17
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23
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Income
(Loss) before Income Taxes
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(1,776)
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(4,550)
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(7,741)
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14,749
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Tax
Provision
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0
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0
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(36)
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0
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Net
Income (Loss)
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($1,776)
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($4,550)
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($7,777)
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$14,749
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Basic
Earnings (Loss) Per Common Share:
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||||||||
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Income
(Loss) from Continuing Operations
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($0.19)
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($0.72)
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($0.98)
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$2.34
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Net
Income (Loss)
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($0.19)
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($0.72)
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($0.98)
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$2.34
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Diluted
Earnings (Loss) Per Common Share:
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||||||||
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Income
(Loss) from Continuing Operations
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($0.19)
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($0.72)
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($0.98)
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$2.33
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||||
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Net
Income (Loss)
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($0.19)
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($0.72)
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($0.98)
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$2.32
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Shares
Used in Calculating Earnings (Loss) Per Share:
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||||||||
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Basic
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9,591
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6,314
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7,961
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6,308
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Diluted
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9,591
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6,314
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7,961
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6,345
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A.P.
PHARMA, INC.
Balance
Sheet Highlights
(in
thousands)
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June
30, 2007
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December
31, 2006
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(Unaudited)
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(1)
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|||
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Assets
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||||
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Cash,
Cash Equivalents and Marketable Securities
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$45,074
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$15,522
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Accounts
Receivable, Net
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139
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75
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||
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Other
Current Assets
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624
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609
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Total
Current Assets
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45,837
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16,206
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Property
and Equipment, Net
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800
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958
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Other
Non-Current Assets
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75
|
87
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Total
Assets
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$46,712
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$17,251
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||
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Liabilities
and Stockholders' Equity
|
||||
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Total
Liabilities
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$4,553
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$5,192
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||
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Stockholders'
Equity
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42,159
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12,059
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||
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Total
Liabilities and Stockholders' Equity
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$46,712
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$17,251
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(1)
Derived from our audited financial statements for the year ended
December
31, 2006 included in the
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Company's
2006 Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
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