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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 10, 2005
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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
On March 10, 2005, the Registrant issued a press release
announcing its financial results for the fiscal quarter and year
ended December 31, 2004. The press release is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
ITEM 9.01 Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated March 10, 2005.
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 10, 2005 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 10,2005.
(continued from previous page)
Exhibit 99.1
A.P. Pharma Logo
News Release
A.P. PHARMA REPORTS 2004 FOURTH QUARTER
AND FULL YEAR RESULTS
- - IND Submitted for APF530; Phase 2 Study Cleared to Begin in 2Q05 -
REDWOOD CITY, Calif. (March 10, 2005) - A.P. Pharma, Inc. (NASDAQ NM:
APPA), a specialty pharmaceutical company, today reported financial
results for the three and 12 months ended December 31, 2004.
Recent and Financial Highlights
- -------------------------------
* APF530 in development for the prevention of acute and delayed
chemotherapy-induced nausea and vomiting progresses to Phase 2.
o Dose-ranging study confirms dose linearity and safety in healthy
volunteers.
o Highest dose (20 mg dose of granisetron) added.
o Clearance received from the FDA to initiate a Phase 2 study
following IND submission.
o Phase 2 study in cancer patients expected to commence in 2Q05.
* Total royalties for the fourth quarter increased 13%, compared
with the prior year's fourth quarter.
o Royalties from sales of Carac(TM) increased 18%.
o Royalties from sales of Retin-A Micro(R) increased 10%.
* Cash, cash equivalents and short-term investments were $13.6
million as of December 31, 2004.
Financial Results
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A.P. Pharma reported royalties for the fourth quarter of 2004 of
$1,457,000, compared with $1,291,000 for the fourth quarter of 2003,
an increase of 13%. Fourth quarter royalties on sales of Retin-A
Micro and Carac grew by 10% and 18%, respectively. Contract revenues
totaled $25,000, compared with $67,000 for the fourth quarter of
2003. Total revenues for the fourth quarter of 2004 totaled
$1,482,000, compared with $1,358,000 for the fourth quarter of 2003,
an increase of $124,000 or 9%.
The Company reported that revenues for 2004 totaled $5,404,000,
compared with $4,848,000 in 2003, an increase of $556,000 or 11%.
Full-year 2004 royalties were $4,972,000, an increase of $470,000 or
10%, compared with the prior year. Royalties on sales of Retin-A
Micro and Carac grew by 10% and 12%, respectively. Full-year
contract revenues increased by $86,000 or 25% to $432,000, compared
with $346,000 in the prior year.
Compared to the corresponding periods in the prior year, research and
development expense increased by $867,000 or 40% to $3,055,000 for
the fourth quarter of 2004, and increased by $3,074,000 or 37% to
$11,495,000 for the year ended December 31, 2004. The increase is
due to the cost of the Phase 2 clinical trial using APF112 for the
treatment of post-surgical pain, in addition to toxicology studies
and a Phase 1 clinical trial using APF530 for the prevention of acute
and delayed chemotherapy-induced nausea and vomiting.
General and administrative expense increased by $78,000 or 11% to
$765,000 for the fourth quarter of 2004, and by $186,000 or 6% to
$3,225,000 for the year ended December 31, 2004, due primarily to
expenses associated with the requirements of the Sarbanes-Oxley Act
of 2002.
The loss from continuing operations in the fourth quarter of 2004 was
$2,263,000, compared with a loss from continuing operations in the
fourth quarter of 2003 of $1,464,000. The loss from continuing
operations for the 12 months ended December 31, 2004 was $9,092,000,
compared with a loss from continuing operations for the prior year of
$6,208,000. The increase in loss from continuing operations for the
fourth quarter and the full year resulted primarily from the
increased spending on clinical trials with APF112 and APF530.
Clinical Update
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Our lead product candidate APF530, which is being tested for the
prevention of acute and delayed chemotherapy-induced nausea and
vomiting using a single subcutaneous injection, is about to enter
Phase 2 clinical testing. In the fourth quarter of 2004, we
evaluated 2.5 mg, 5 mg, and 10 mg doses of the anti-nausea drug
granisetron, the active pharmacological agent in APF530, in a Phase 1
clinical trial and saw sustained plasma levels over a four-day
period. We added and have now completed a fourth cohort to this
safety study using a 20 mg dose. Preliminary results again indicate
a dose-proportionate increase in plasma levels of granisetron.
Meaningful plasma levels were observed over a five-day period.
We believe these results are particularly important because published
data suggest that appropriate plasma levels of granisetron can
potentially predict the therapeutic effect on both acute and delayed
chemotherapy-induced nausea and vomiting.
A.P. Pharma filed an IND with the FDA in early 2005, and following
FDA clearance we now expect to initiate a Phase 2 clinical trial with
APF530 during the second quarter of 2005. The protocol design is an
open label, ascending single dose in patients undergoing moderately
emetogenic chemotherapy for cancer. The primary endpoints are
pharmacokinetics, safety and tolerability.
With regard to APF112 for the treatment of post-surgical pain, we
have designed a further Phase 2 trial to evaluate a combination
therapy using bupivacaine for immediate pain relief and APF112 for
longer-term post-surgical pain relief. Our goal is to eliminate the
need for opioids, which can have serious side effects. We plan to
initiate this next study after securing an appropriate partner for
this product application.
Conference Call Information
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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 this announcement 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 4453327.
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(TM). Initial target areas of application for the
Company's drug delivery technology include anti-nausea, pain
management, inflammation and ophthalmic applications. The Company's
product development programs are funded by the sale of common stock
in June 2004, royalties from topical products currently marketed by
pharmaceutical partners, proceeds from the divestitures of its
cosmeceutical and analytical standards product lines and by fees it
receives from collaborative partners. 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,
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
Zach Bryant (zbryant@lhai.com) Chief Financial Officer
Jody Cain (jcain@lhai.com) (650) 366-2626
Bruce Voss (bvoss@lhai.com)
(310) 691-7100
(Financial tables follow)
A.P. PHARMA, INC.
Income Statement Highlights
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2004 2003 2004 2003(1)
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Royalties $ 1,457 $ 1,291 $ 4,972 $ 4,502
Contract Revenues 25 67 432 346
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Total Revenues 1,482 1,358 5,404 4,848
Operating Expenses:
Research & Development 3,055 2,188 11,495 8,421
General & Administrative 765 687 3,225 3,039
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Total Operating Expenses 3,820 2,875 14,720 11,460
Operating Loss (2,338) (1,517) (9,316) (6,612)
Interest and Other, Net 75 53 224 404
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Loss from Continuing
Operations (2,263) (1,464) (9,092) (6,208)
Gain (Loss) on Disposition
of Discontinued Operations 6 86 (129) 1,845
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Net Loss $(2,257) $(1,378) $(9,221) $(4,363)
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Basic and Diluted Loss
Per Share:
Loss from Continuing
Operations $ (0.09) $ (0.07) $ (0.40) $ (0.30)
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Net Loss $ (0.09) $ (0.07) $ (0.40) $ (0.21)
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Shares Used in Calculating
Loss Per Share:
Basic and Diluted 25,000 20,632 22,909 20,553
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(1) Information derived from audited financial statements included in the
Company's 2003 Form 10-K.
A.P. PHARMA, INC.
Balance Sheet Highlights
(in thousands)
December 31, December 31,
2004 2003
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Assets
Cash, Cash Equivalents and
Marketable Securities $13,596 $ 9,484
Accounts Receivable, Net 1,506 1,340
Other Current Assets 394 434
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Total Current Assets 15,496 11,258
Property & Equipment, Net 1,235 1,430
Other Non-Current Assets 283 467
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Total Assets $17,014 $13,155
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Liabilities and Shareholders' Equity
Current Liabilities $ 2,860 $ 1,892
Shareholders' Equity 14,154 11,263
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Total Liabilities and Shareholders' Equity $17,014 $13,155
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