REDWOOD CITY, Calif.--(’s resources on APF530 in light of current conditions in the capital markets, A.P. Pharma is placing several earlier stage development programs “on hold,” and has implemented headcount reductions and other cost-saving initiatives.)--A.P. Pharma, Inc. (NASDAQ: APPA), a specialty pharmaceutical company, today reported financial results for its third quarter ended September 30, 2008. The company also announced additional positive clinical data for its lead product, APF530, which has successfully completed a Phase 3 trial for the treatment of chemotherapy-induced nausea and vomiting (CINV). In addition, in order to better focus the company
“The decision to reduce our workforce was a difficult yet necessary one. On behalf of the A.P. Pharma Board of Directors, I would also like to express a sincere ‘thank you’ to our colleagues who are affected by this decision. We wish them well in their future professional endeavors.”
Phase 3 Data
Top-line data from the multi-center, randomized Phase 3 trial comparing APF530 with Aloxi® was previously released on September 30. The additional data from the Phase 3 study provided herein includes predetermined secondary efficacy endpoints and safety data that were not available at the time the top-line data were released. Review of the clinical data package demonstrates the robustness of the APF530 clinical response within and across chemotherapy cycles. Some of the new key findings follow:
Complete Response(1) of APF530 10 mg Dose Over Four Chemotherapy Cycles
• Acute (0-24h)
• Delayed (24-120h)
• Overall (0-120h)
• Acute (0-24h)
• Delayed (24-120)
• Overall (0-120h)
(1) No emetic episodes and no rescue medications
Dr. John Barr, A.P. Pharma’s Senior Vice President of Research and Development, commented, “These additional results confirm and support the top-line Phase 3 findings we announced just a few weeks ago. The safety and efficacy data from the trial support the potential therapeutic role for APF530 as a ‘long acting 5HT3 antagonist for the treatment of chemotherapy-induced nausea and vomiting.’ We are diligently working to incorporate the Phase 3 clinical findings into our NDA and are confident that we will have a high-quality submission to the FDA in December of this year.”
Cost Reduction Actions
The company also announced that in response to the deterioration of the overall economic environment and the financial markets, the decision has been made to focus its efforts and resources on APF530, the company’s most advanced program. Activities related to earlier stage programs including APF112 (a Phase 2, long-acting local anesthetic) and APF580 (a seven-day formulation of an undisclosed opioid, which has completed preclinical testing for acute pain with the successful filing of an IND in September 2008) will be put on hold, having reached logical stopping points prior to initiation of new clinical trials. Additional cash conservation measures include a significant reduction in headcount and broad operating expense constraints.
Effective earlier this week, A.P. Pharma eliminated 18 positions, approximately 35% of its workforce. The company expects one-time costs associated with this headcount reduction to be approximately $300,000, which will be recorded in the fourth quarter of 2008. With the cost savings expected from the product pipeline deferrals, headcount reductions and other expense cutbacks, the company expects to have sufficient resources to allow continuation of key APF530 program activities into the third quarter of 2009, well beyond the submission of the NDA targeted for December 2008.
Ronald Prentki, A.P. Pharma’s President and CEO, commented, “In light of the current economic uncertainties and volatile capital markets, we are taking these timely and meaningful actions to ensure the company’s ongoing viability. We will focus our resources on the major goal of filing the NDA for APF530 and advancing this product toward regulatory approval. Our efforts to establish a commercialization partnership for APF530 continue to be active. We intend, if possible, to complete such a partnership with its attendant upfront capital infusion in advance of any future capital needs for the continued operations of the company.”
Prentki added, “The decision to reduce our workforce was a difficult yet necessary one. On behalf of the A.P. Pharma Board of Directors, I would also like to express a sincere ‘thank you’ to our colleagues who are affected by this decision. We wish them well in their future professional endeavors.”
Results of Operations
A.P. Pharma reported a net loss for the third quarter of 2008 of $6.2 million, or $0.20 per share, compared with a net loss for the third quarter of 2007 of $4.7 million, or $0.15 per share. The larger net loss for the third quarter of 2008, as compared with the same period in 2007, was due to an increase in general and administrative expenses as a result of higher professional and consulting services and increased stock-based compensation costs, and increased research and development expenses as a result of increased headcount and other related costs, including stock-based compensation expense.
Contract revenues related to the development program utilizing the company’s proprietary Biochronomer™ technology with a major animal healthcare company were $64,000 in the third quarter of 2008, compared with $121,000 in the third quarter of 2007.
The company ended the third quarter with $16.5 million of cash, cash equivalents and marketable securities on its balance sheet, which compares with $35.1 million at December 31, 2007.
Prevention and control of nausea and vomiting, or emesis, are very important in the treatment of cancer patients. The majority of patients receiving chemotherapy will experience some degree of emesis if not prevented with an anti-emetic, typically administered just prior to chemotherapy.
Chemotherapy treatments can be classified as moderately emetogenic, meaning that 30% to 90% of patients experience CINV, or highly emetogenic, meaning that more than 90% of patients experience CINV, if they do not receive an anti-emetic. Acute onset CINV occurs within the first 24 hours following chemotherapy treatment. Delayed onset CINV occurs more than 24 hours after treatment and may persist for several days. Prevention of CINV is significant because the distress caused by CINV can severely disrupt patient quality of life and can lead some patients to delay or discontinue chemotherapy.
About APF530 and the Phase 3 Trial
A.P. Pharma’s lead product, APF530, is being developed for the prevention of both acute and delayed onset CINV. APF530 is delivered by a single subcutaneous injection and contains the 5HT3 antagonist granisetron. Injections and oral tablets containing granisetron are approved for the prevention of acute onset CINV, but not for delayed onset CINV. Granisetron was selected because it is a potent drug and the applicable granisetron U.S. patent expired on December 29, 2007.
The pivotal Phase 3 clinical trial, initiated in May 2006, was a multi-center, randomized, observer-blind, actively-controlled, double-dummy, parallel group study that compared the efficacy of APF530 with Aloxi. During 2006 and the first half of 2007, all patient enrollments were within the U.S.; beginning in the second half of 2007, enrollments were broadened to include sites in India and Poland. The trial enrolled and treated 1,395 patients stratified in two groups, one receiving moderately and the other receiving highly emetogenic chemotherapeutic agents. In each group, the patients were randomized to receive in the first chemotherapy treatment cycle either APF530 high dose (10mg), APF530 low dose (5mg) or the currently approved dose of Aloxi. Standardized doses of a corticosteroid were employed in this trial, the doses used depended on the emetogenic level of chemotherapy calculated according to the Hesketh algorithm. In subsequent treatment cycles (up to three additional cycles), the patients were re-randomized to either of the two APF530 doses.
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 71319393. 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
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™. A.P. Pharma’s lead product, APF530, is being developed for the prevention of both acute and delayed onset chemotherapy-induced nausea and vomiting (CINV). APF530 is delivered by a single subcutaneous injection and contains the 5HT3 antagonist granisetron. APF530 has successfully completed Phase 3 trials and the company plans to file the NDA in December 2008. 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.
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, establishment of new corporate alliances, cost savings programs, cash expenditure expectations 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.
|A.P. PHARMA, INC.|
|Income Statement Highlights|
|(in thousands, except per share data)|
|Three Months Ended||Nine Months Ended|
|September 30,||September 30,||September 30,||September 30,|
|Research & Development||5,069||4,595||16,747||13,344|
|General & Administrative||1,272||762||3,215||2,753|
|Total Operating Expenses||6,341||5,357||19,962||16,097|
|Interest Income, Net||111||561||547||865|
|Gain on Sale of Interest in Royalties||-||-||-||2,500|
|Other Income , Net||1||(3||)||8||1|
|Loss from Continuing Operations||(6,165||)||(4,678||)||(19,059||)||(12,451||)|
|Income (Loss) from Discontinued Operations||(40||)||1||(120||)||33|
|Income (Loss) before Income Taxes||(6,205||)||(4,677||)||(19,179||)||(12,418||)|
|Provision for Income Taxes||-||(8||)||-||(44||)|
|Basic and Diluted Net Loss Per Common Share:|
|Loss from Continuing Operations||($0.20||)||($0.15||)||($0.62||)||($0.80||)|
|Shares Used in Calculating Loss Per Share:||30,819||30,736||30,806||15,553|
|AP PHARMA, INC.|
|Balance Sheet Highlights|
|September 30, 2008||December 31, 2007|
|Cash, Cash Equivalents and Marketable Securities||$||16,539||$||35,062|
|Accounts Receivable, Net||32||152|
|Other Current Assets||323||582|
|Total Current Assets||16,894||35,796|
|Property and Equipment, Net||1,060||1,079|
|Other Non-Current Assets||103||75|
|Liabilities and Stockholders' Equity|
|Total Liabilities and Stockholders' Equity||$||18,057||$||36,950|
(1) Derived from our audited financial statements for the year ended December 31, 2007 included in the Company's 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission.