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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 12, 2004
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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 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits
99.1 Press release dated March 12, 2004.
ITEM 12. Results of Operations and Financial Condition.
The following information is disclosed pursuant to Item 12 of
Form 8-K:
On March 12, 2004, the Registrant issued a press release
announcing its financial results for the fiscal quarter and year
ended December 31, 2003. The press release is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
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 12, 2004 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 12, 2004.
(continued from previous page)
Exhibit 99.1
A.P. Pharma Logo
News Release
A.P. PHARMA REPORTS 2003 FOURTH QUARTER
AND FULL YEAR RESULTS
- Reports Results of Open-Label APF112 Phase 2 study -
REDWOOD CITY, Calif. (March 12, 2004) - A.P. Pharma, Inc. (NASDAQ NM: APPA),
a specialty pharmaceutical company, today reported financial results for the
three and 12 months ended December 31, 2003, and results from Part 1 of the
APF112 Phase 2 clinical study.
Recent and Financial Highlights
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o APF112 Phase 2 study for the treatment of pain following inguinal hernia
procedures is designed in two parts:
* Part 1 open-label study has been successfully completed. Results are
summarized below.
* Part 2 blinded study is underway and the Company expects preliminary
data by mid-year.
o The Company expects to commence human clinical studies with APF530 for the
prevention of nausea and vomiting following chemotherapy or surgery in the
second quarter of 2004.
o Results from a study conducted at MIT indicate that a Biochronomer(TM)
formulation could advance DNA vaccine usage against viral infections and
cancers. This study was reported in the February 2004 issue of Nature
Materials.
o 2003 royalty income of $4.5 million increased 12% over the prior year,
driven primarily by 21% growth of Retin-A Micro(R).
o Net cash burn for 2003 was $4.6 million.
o Cash, cash equivalents and short-term investments were $9.5 million at
December 31, 2003.
APF112 Open-Label Study Results
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The open-label study focused on pharmacokinetics, safety and pain management
in patients who had undergone inguinal hernia repair.
* The pharmacokinetic measurements in this 10 patient open-label study
demonstrated meaningful levels of mepivacaine over a three-day period
consistent with observations made in preclinical studies with APF112. In
addition, there was good patient-to-patient consistency in this group.
* No severe or serious adverse events were reported. Nausea was the most
frequent reported untoward effect but this event was considered to be
associated with the general anesthesia. Wound healing in all patients was
observed to be normal.
* Both patients and physicians reported good to very good quality of pain
control. However, it should be stressed that this was an open-label part
of the study with no control group.
"We are especially gratified by the outcomes of the first part of the Phase 2
trial, which not only provided us with excellent safety and pharmacokinetic
information, but also facilitated our selection of dosage levels for the
second part of the study," said A.P. Pharma President and CEO Michael
O'Connell.
The second part of the Phase 2 trial is a 90-patient blinded study comparing
two doses of APF112 with current standard treatments for post-surgical pain.
The endpoints for the trial will include a visual analog score of pain
intensity, the standard means of measuring pain, and patient reduction in
opioid-type pain medication.
APF112 combines A.P. Pharma's proprietary Biochronomer(TM) bioerodible drug
delivery system with mepivacaine, an off-patent analgesic. APF112 is
designed to provide 24 to 36 hours of pain relief while minimizing the use of
opioid-type drugs, which are used extensively in post-operative pain
management.
Financial Results
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The Company reported royalties for the fourth quarter of 2003 of $1,291,000,
compared with $1,258,000 for the fourth quarter of 2002. Contract revenues
totaled $67,000, compared with $214,000 for the fourth quarter of 2002. The
fourth quarter of 2002 also included the recognition of deferred revenues of
$237,000 resulting from the forfeiture by a partner of certain rights to a
proprietary Microsponge(R) formulation.
The Company reported full-year 2003 total royalties of $4,502,000, an
increase of $476,000 or 12%, compared with the prior year. Full year
royalties on sales of Retin-A Micro grew by 21% over the prior year.
Contract revenues for 2003 totaled $346,000, compared with $407,000 in the
prior year. Total revenues for 2003 totaled $4,848,000, compared with
$4,670,000 in 2002, an increase of $178,000 or 4%.
Research and development expense for the fourth quarter of 2003 increased by
$813,000 or 56% to $2,269,000, due to initiation of the APF112 Phase 2
clinical trial for the treatment of pain following inguinal surgery repair.
Research and development expense for the 12 months ended December 31, 2003
increased by $1,961,000 or 29% to $8,660,000, reflecting the entry of APF112
into the Phase 2 clinical trial, together with costs associated with the
manufacturing of GMP materials.
The loss from continuing operations in the 2003 fourth quarter was
$1,464,000, compared with a loss from continuing operations in the 2002
fourth quarter of $413,000. The loss from continuing operations for the 12
months ended December 31, 2003 was $6,208,000, compared with a loss from
continuing operations for the prior year of $4,395,000. The loss from
continuing operations for the fourth quarter and the full year resulted
primarily from the increased spending on the Phase 2 trials.
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. Joining management on this conference
call will be Dan J. Kopacz, M.D. of Virginia Mason Medical Center, to discuss
progress with the APF112 Phase 2 trial.
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 5937837.
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 pain management, anti-nausea,
inflammation, oncology and ophthalmology applications. The Company's product
development programs are funded by royalties from topical products currently
marketed by pharmaceutical partners, by 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
Jody Cain (jcain@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)
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
(Unaudited) (Unaudited) (Unaudited) (1)
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Royalties $ 1,291 $ 1,258 $ 4,502 $ 4,026
Contract Revenues 67 214 346 407
License Fees -- 237 -- 237
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Total Revenues 1,358 1,709 4,848 4,670
Operating Expenses:
Research & Development 2,269 1,456 8,660 6,699
General & Administrative 606 807 2,800 3,024
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Total Operating Expenses 2,875 2,263 11,460 9,723
Operating Loss (1,517) (554) (6,612) (5,053)
Interest and Other, Net 53 141 404 658
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Loss from Continuing Operations (1,464) (413) (6,208) (4,395)
Gain (Loss) on Disposition of
Discontinued Operations 86 186 1,845 617
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Net Loss $(1,378) $ (227) $(4,363) $(3,778)
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Basic and Diluted Loss
Per Share:
Loss from Continuing
Operations $ (0.07) $ (0.02) $ (0.30) $ (0.22)
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Net Loss $ (0.07) $ (0.01) $ (0.21) $ (0.19)
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Shares Used in Calculating
Loss Per Share:
Basic and Diluted 20,632 20,456 20,553 20,409
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(1) Information derived from audited financial statements included in the
Company's 2002 Form 10-K.
A.P. PHARMA, INC.
Balance Sheet Highlights
(in thousands)
December 31, December 31,
2003 2002
(Unaudited) (1)
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Assets
Cash, Cash Equivalents and
Marketable Securities $ 9,484 $14,121
Accounts Receivable, Net 1,340 1,340
Assets Held for Sale -- 225
Other Current Assets 434 280
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Total Current Assets 11,258 15,966
Property & Equipment, Net 1,430 1,626
Other Non-Current Assets 467 189
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Total Assets $13,155 $17,781
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Liabilities and Shareholders' Equity
Current Liabilities $1,892 $ 1,977
Long-Term Deferred Revenues -- 345
Shareholders' Equity 11,263 15,459
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Total Liabilities and Shareholders' Equity $13,155 $17,781
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(1) Information derived from audited financial statements included in the
Company's 2002 Form 10-K.