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Form 10-Q for LA JOLLA PHARMACEUTICAL CO


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5-Nov-2004

Quarterly Report



ITEM 2. MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements

The forward-looking statements in this report involve significant risks and uncertainties, and a number of factors, both foreseen and unforeseen, could cause actual results to differ materially from our current expectations. Forward-looking statements include those that express a plan, belief, expectation, estimation, anticipation, intent, contingency, future development or similar expression. The analyses of clinical results of Riquent, previously known as LJP 394, our drug candidate for the treatment of systemic lupus erythematosus ("lupus"), and LJP 1082, our drug candidate for the treatment of antibody-mediated thrombosis ("thrombosis"), including the results of any trials that are ongoing or that we may initiate in the future, could result in a finding that these drug candidates are not effective in large patient populations, do not provide a meaningful clinical benefit, or may reveal a potential safety issue requiring us to develop new candidates. The analysis of the data from our Phase 3 trial of Riquent showed that the trial did not reach statistical significance with respect to its primary endpoint, time to renal flare, or with respect to the secondary endpoint, time to treatment with high-dose corticosteroids or cyclophosphamide. The results from our clinical trials of Riquent, including the results of any trials that are ongoing or that we may initiate in the future, may not ultimately be sufficient to obtain regulatory clearance to market Riquent either in the United States or Europe, and we may be required to conduct additional clinical studies to demonstrate the safety and efficacy of Riquent in order to obtain marketing approval. There can be no assurance, however, that we will have the necessary resources to complete any additional trial or that any additional



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trial will sufficiently demonstrate the safety and efficacy of Riquent. Our blood test to measure the binding affinity for Riquent is experimental, has not been validated by independent laboratories and will likely be reviewed as part of the Riquent approval process. Our other potential drug candidates are at earlier stages of development and involve comparable risks. Analysis of our clinical trials could have negative or inconclusive results. Any positive results observed to date may not be indicative of future results. In any event, regulatory authorities may require clinical trials in addition to our current clinical trial, or may not approve our drugs. Our ability to develop and sell our products in the future may be adversely affected by the intellectual property rights of third parties. Additional risk factors include the uncertainty and timing of: our clear need for additional financing; obtaining required regulatory approvals, including delays associated with any approvals that we may obtain; our ability to pass all necessary FDA inspections; the increase in capacity of our manufacturing capabilities for possible commercialization; successfully marketing and selling our products; our lack of manufacturing, marketing and sales experience; our ability to make use of the orphan drug designation for Riquent; generating future revenue from product sales or other sources such as collaborative relationships; future profitability; and our dependence on patents and other proprietary rights. Readers are cautioned to not place undue reliance upon forward-looking statements, which speak only as of the date hereof, and we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date hereof. Interested parties are urged to review the risks described in our Annual Report on Form 10-K for the year ended December 31, 2003, and in other reports and registration statements that we file with the Securities and Exchange Commission from time to time.

Recent Developments

On February 16, 2004, we announced that our New Drug Application ("NDA") for Riquent® had been accepted for review by the United States Food and Drug Administration (the "FDA"). Our NDA submission was prepared based on our understanding the FDA could approve Riquent on the basis of our clinical trial results or under Subpart H. Under Subpart H, drugs in development for serious, life-threatening diseases with an unmet medical need can be approved on an accelerated basis if the FDA determines that the effect of the drug on a surrogate endpoint is reasonably likely to predict clinical benefit and that a post-marketing clinical trial can be successfully completed following drug approval which confirms the clinical benefit. As previously announced, in our Phase 3 and Phase 2/3 trials, patients treated with Riquent had significantly reduced levels of antibodies to dsDNA compared with patients treated with placebo.

On August 2, 2004, we announced that we had reached a written agreement with the Cardio-Renal Division of the FDA concerning a trial that is designed to fulfill an obligation to conduct a Phase 4 post-marketing clinical trial if Riquent were to be approved under Subpart H. We also announced that we had initiated the trial.

On October 14, 2004, we announced that we had received a letter from the FDA indicating that our lupus drug candidate, Riquent (abetimus sodium), is approvable, but that an additional radomized, double-blind study demonstrating the clinical benefit of Riquent would need to be completed prior to approval. The FDA letter indicated that the clinical trial initiated in August 2004 would appear to satisfy this requirement. We continue to analyze the approval processes and have requested a meeting with the FDA to discuss the next steps in the development of Riquent.

We also are currently meeting with European regulatory authorities to discuss potential next steps for Riquent in Europe, including the filing of a Marketing Authorization Application (MAA) with the European Medicines Agency. There can be no guarantee that future meetings with the FDA or other regulatory agencies can be held in a timely manner, or at all, or that our meetings with them will result in our being able to continue to develop Riquent. If for any reason our development efforts as to Riquent are terminated, it would have a material adverse effect on our business and future prospects.

Overview

Since our inception in May 1989, we have devoted substantially all of our resources to the research and development of technology and potential drugs to treat antibody-mediated diseases. We



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have never generated any revenue from product sales and have relied upon private and public offerings of securities, revenue from collaborative agreements, equipment financings and interest income on invested cash balances for our working capital. Based upon the results of the FDA`s recent review of our NDA, and depending upon the outcome of our further discussions with the FDA and other regulatory agencies and our continuing analysis of the data from our clinical trials of Riquent, our research and development expenses may increase significantly in the future. For example, we have initiated a clinical trial of Riquent that the FDA has indicated appears to satisfy its requirement that we conduct an additional randomized, double-blind study. In addition, our research and development expenses may increase if we initiate any additional clinical studies of Riquent or if we increase our activities related to the development of LJP 1082 or other drug candidates. Our activities to date are not as broad in depth or scope as the activities we may undertake in the future, and our historical operations and the financial information included in this report are not necessarily indicative of our future operating results or financial condition.

We expect our net loss to fluctuate from quarter to quarter as a result of the timing of expenses incurred and the revenues earned from any potential collaborative arrangements we may establish. Some of these fluctuations may be significant. As of September 30, 2004, our accumulated deficit was approximately $222.0 million.

Our business is subject to significant risks, including, but not limited to, the risks inherent in research and development efforts, including clinical trials, the lengthy, expensive and uncertain process of seeking regulatory approvals, uncertainties associated with both obtaining and enforcing patents, the potential enforcement of the patent rights of others, uncertainties regarding government reforms regarding product pricing and reimbursement levels, technological change, competition, manufacturing uncertainties, our lack of marketing experience, the uncertainty of receiving future revenue from product sales or other sources such as collaborative relationships, the uncertainty of future profitability and the clear need for additional financing. Even if our product candidates appear promising at an early stage of development, they may not reach the market for numerous reasons, including the possibilities that the products will be ineffective or unsafe during clinical trials, will fail to receive necessary regulatory approvals, will be difficult to manufacture on a large scale, will be uneconomical to market or will be precluded from commercialization by the proprietary rights of third parties or competing products.

Results of Operations

For the three months ended September 30, 2004, research and development expenses increased to $10.7 million from $5.6 million for the same period in 2003 primarily due to the purchase of a large amount of raw materials, which we expect to use in the production of validation lots of Riquent in 2004. We expect to use the validation lots in connection with the submission of the MAA in Europe, and for other purposes, including our ongoing clinical trial. For the nine-month period ended September 30, 2004, research and development expenses decreased to $24.3 million from $26.0 million for the same period in 2003 primarily due to decreases in costs incurred for clinical studies of Riquent, including the open-label follow-on clinical trial which was closed in April 2003 and the unblinding and analysis of the data from the Phase 3 trial of Riquent in the first quarter of 2003. These decreases were partially offset by the increase in expenses noted above during the third quarter.

Research and development expense of $10.7 million for the three months ended September 30, 2004 consisted of $9.5 million for lupus research and development related expense, $0.5 million for thrombosis research and development related expense, and $0.7 million for other research and development related expense. Research and development expense of $24.3 million for the nine months ended September 30, 2004 consisted of $21.1 million for lupus research and development related expense, $1.3 million for thrombosis research and development related expense, and $1.9 million for other research and development related expense. For the three and nine months ended September 30, 2004, total lupus research and development expense consisted primarily of salaries and other costs related to research, manufacturing and clinical personnel, raw materials for the production of Riquent, manufacturing supplies, fees for consulting and outside services and costs related to clinical studies of Riquent. Total thrombosis related research and development expense consisted primarily of salaries for research and development personnel and research supplies. Total other research and development expense consisted primarily of salaries for research and development personnel and research supplies.



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Our research and development expenses may increase significantly in the future. For example, we have initiated a clinical trial of Riquent that the FDA has indicated appears to satisfy its requirement that we conduct an additional randomized, double-blind study. This study is expected to involve a significant number of patients and take several years to complete. In addition, our research and development expenses may increase significantly if we initiate any additional clinical studies of Riquent or if we increase our activities related to the development of LJP 1082 or other drug candidates.

General and administrative expense increased to $2.3 million and $5.5 million for the three and nine months ended September 30, 2004, respectively, from $1.4 million and $4.8 million for the same periods in 2003. The increase was primarily due to an increase in consulting and professional fees for pre-marketing, intellectual property and other administrative activities. General and administrative expense may increase in the future to support clinical trials and possible increases in manufacturing and research and development activities.

Interest income, net was $0.1 million for the three months ended September 30, 2004 and September 30, 2003. Interest income, net decreased to $0.1 million for the nine months ended September 30, 2004 from $0.4 million for the same period in 2003 due to lower average interest rates and investment balances, an increase in notes payable obligations, and realized losses on the sale of investments.

Liquidity and Capital Resources

From inception through September 30, 2004, we have incurred a cumulative net loss of approximately $222.0 million and have financed our operations through private and public offerings of securities, revenues from collaborative agreements, equipment financings, and interest income on invested cash balances. From inception through September 30, 2004, we raised approximately $258.0 million in net proceeds from sales of equity securities.

At September 30, 2004, we had $35.2 million in cash, cash equivalents and short-term investments, as compared to $32.1 million at December 31, 2003. Our working capital at September 30, 2004 was $28.5 million, as compared to $28.9 million at December 31, 2003. The increase in cash, cash equivalents and short-term investments resulted from our receipt of net proceeds of $29.4 million from the sale of 10.0 million shares of our common stock in February and March of 2004, partially offset by the use of our financial resources to fund our manufacturing activities, research and development efforts and for other general corporate purposes. We invest our cash in corporate and United States government-backed debt instruments. As of September 30, 2004, we classified all of our investments as available-for-sale securities because we expect to sell them in order to support our current operations regardless of their maturity dates. As of September 30, 2004, available-for-sale securities and cash equivalents of $17.9 million have stated maturity dates of one year or less and $15.9 million have maturity dates after one year.

As of September 30, 2004, we had acquired an aggregate of $14.7 million in property and equipment, of which approximately $0.1 million and $3.5 million of equipment is financed under capital lease and notes payable obligations, respectively. In addition, we lease our office and laboratory facilities and certain equipment under operating leases. We have entered into a $1.4 million purchase commitment with a potential third party manufacturer of materials for Riquent. The purpose of the agreement is to qualify the manufacturer as a manufacturer that we could use in the commercial production of Riquent if we obtain regulatory approval. The agreement includes a cancellation fee of $0.4 million. We have also entered into a non-cancelable $0.7 million purchase commitment with a third-party manufacturer of materials to be used in the production of our validation lots of Riquent. We intend to use our current financial resources to fund our obligation under these purchase commitments. In the future, we may increase our investments in property and equipment if we expand our research and development and manufacturing facilities and capabilities.

During the nine-month period ended September 30, 2004, we entered into three additional note payable obligations for $189,000, $132,000, and $157,000, the proceeds of which we used to finance the purchase of certain property and equipment. In June 2004, we exercised an option to extend a lease for additional research space for nine months. In July 2004, we exercised an option to extend the leases for



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our research and development laboratories, clinical manufacturing facilities and office space for an additional five years. The following table summarizes our contractual obligations at September 30, 2004. Long-term debt and capital lease obligations include interest.


Payment due by period (in thousands)
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Less than More than
Total 1 Year 1-3 Years 3-5 Years 5 Years
----------- -------------- -------------- ----------- -----------
Long-Term Debt Obligations $ 2,067 $ 1,055 $ 1,012 $ - $ -
Capital Lease Obligations 29 29 - - -
Operating Lease Obligations 4,083 910 2,458 715 -
Purchase Obligations 2,193 2,193 - - -
Total $ 8,372 $ 4,187 $ 3,470 $ 715 $ -




We intend to use our financial resources to fund our research and development efforts, the current ongoing clinical trial of Riquent, possible further clinical studies, manufacturing activities, and for working capital and other general corporate purposes. The amounts that we actually spend for each purpose may vary significantly depending upon numerous factors, including the timing of any regulatory applications and approvals, the outcome of our meetings with regulatory authorities, the continued analysis of the clinical trial data of Riquent, results from current and future clinical trials, and technological developments. Expenditures also will depend upon any establishment of collaborative arrangements and contract research as well as the availability of other funding or financings. There can be no assurance that future funds will be available to us on acceptable terms, if at all.

We anticipate that our existing cash and cash investments and interest earned thereon will be sufficient to fund our operations as currently planned into the second quarter of 2005, assuming that we engage in limited clinical trial activities, including limited activities on our current clinical trial of Riquent, that we do not commence any significant commercialization activities and that we do not enter into an agreement with a collaborative partner or undertake any other financing activities. Our future capital requirements will depend upon a number of factors, including the outcome of meetings with regulatory authorities, the scope and duration of clinical trials, including the ongoing clinical trial, the time and costs involved in applying for any regulatory approvals, the continued analysis of data from our clinical trials of Riquent and LJP 1082, continued scientific progress in our research and development programs, the size and complexity of these programs, the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims, competing technological and market developments, our ability to establish and maintain future collaborative relationships, and the cost of our manufacturing activities. We expect to incur significant net operating losses each year for at least the next several years as we continue our current research and development efforts, including the continuation of the ongoing clinical trial of Riquent, and the general and administrative expenses incurred to support this effort. It is possible that our cash requirements will exceed our current projections and that we will therefore need additional financing sooner than currently expected.

We currently have no means of generating cash flow from operations. Our lead drug candidate, Riquent, will not generate revenues, if at all, until it has received regulatory approval and has been successfully manufactured, marketed and sold. This process, if completed, could take a significant amount of time. Our other drug candidates are much less developed than Riquent. There can be no assurance that our product development efforts with respect to Riquent or any other drug candidate will be successfully completed, that required regulatory approvals will be obtained or that any product, if introduced, will be successfully marketed or achieve commercial acceptance. Accordingly, we must continue to rely on outside sources of financing to meet our capital needs for the foreseeable future.

We will continue to seek capital through appropriate means, including the issuance of our securities and the establishment of collaborative arrangements. However, there can be no assurance that additional financing will be available to us on acceptable terms, if at all, and our negotiating position in capital-raising efforts may worsen as we continue to use existing resources or if the development of Riquent is delayed or terminated. There is also no assurance that we will be able to enter into future collaborative relationships.



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[superroth]

yo, da is wohl schicht im schacht.



der letzte macht dann`s licht aus

[10km]

bitte nur detaillierte antworten.kannst du überhaupt englisch lesen?

[wohinistmeinGeld]

können schon, aber wollen nicht
Ich verstehe die Börse nicht mal auf deutsch, was will ich dann mit Englisch

[Isabartels]

#2



Nasdaq NM 1,37 USD +0,21 +18,10% 09.11. 20:01:20 1,062161 1,35 1,36 0,74% 2.500 2.549.604

[10km]

hier der link von dem yahoo forum

http://finance.yahoo.com/q/mb?s=LJPC

interessant ist der shortanteil von 6,7 millionen aktien.
die brauchen tage bei guten nachrichten.
fdameeting sollte bald vorbei gehen.

bei nur ansatzweise guten nachrichten steht der kurs bald
bei 3 euro