La Jolla Pharmaceutical Company Announces Financial Results for the Three Months Ended March 31, 2021 and Highlights Corporate Progress

La Jolla Pharmaceutical Company (Nasdaq: LJPC), which is dedicated to the development and commercialization of innovative therapies that improve outcomes in patients suffering from life-threatening diseases, today announced financial results for the three months ended March 31, 2021 and highlighted corporate progress.

Corporate Progress

• Operating Cash Flow Improved: La Jolla’s net cash provided by (used for) operating activities for the three months ended March 31, 2021 was $17.2 million, compared to $(12.2) million for the same period in 2020. La Jolla’s net cash provided by (used for) operating activities excluding net receipts in connection with license agreements and payments related to reductions in headcount for the three months ended March 31, 2021 was $(1.8) million, compared to $(9.2) million for the same period in 2020.
• $3.0 Million Milestone Payment Associated with NDA Submission for XERAVA (Eravacycline) in China by Licensee Everest Received: In March 2021, under its license agreement with Everest Medicines Limited, the Company received a $3.0 million milestone payment associated with the submission of a New Drug Application (NDA) with the China National Medical Products Administration (NMPA) for XERAVA for the treatment of cIAI in patients in China. The Company previously granted Everest an exclusive license to develop and commercialize XERAVA for the treatment of cIAI and other indications in mainland China, Taiwan, Hong Kong, Macau, South Korea, Singapore, the Malaysian Federation, the Kingdom of Thailand, the Republic of Indonesia, the Socialist Republic of Vietnam and the Republic of the Philippines. The Company is eligible to receive an additional $8.0 million regulatory milestone payment and up to an aggregate of $20.0 million in sales milestone payments. The Company is also entitled to receive royalties from Everest on sales, if any, by Everest of products containing eravacycline.
• License Agreement for GIAPREZA (Angiotensin II) and XERAVA in Europe, which Included a $22.5 Million Upfront Payment, Executed with PAION: In January 2021, the Company entered into a license agreement with PAION AG to commercialize GIAPREZA and XERAVA in the European Economic Area, the United Kingdom and Switzerland. Pursuant to the agreement: (i) the Company has received an upfront cash payment of $22.5 million, less a 15% refundable withholding tax; and (ii) the Company is entitled to receive potential commercial milestone payments of up to $109.5 million and royalties on net sales of GIAPREZA and XERAVA.

“We are pleased to report continued progress toward our goal of becoming cash flow positive from operations,” said Larry Edwards, President and Chief Executive Officer of La Jolla. “The filing of an NDA for XERAVA in China by our licensee Everest and the execution of our license agreement with PAION for GIAPREZA and XERAVA in Europe position us well to serve the needs of patients suffering from life-threatening diseases globally while significantly strengthening our balance sheet. We continue to focus on growing net sales of both GIAPREZA and XERAVA while managing operating costs.”

Financial Results

For the three months ended March 31, 2021, La Jolla’s total revenue was $34.1 million, compared to $7.6 million for the same period in 2020. For the three months ended March 31, 2021, La Jolla’s net product sales were $8.7 million, compared to $7.6 million for the same period in 2020. GIAPREZA U.S. net sales were $6.9 million for the three months ended March 31, 2021, compared to $7.6 million for the same period in 2020. XERAVA U.S. net sales were $1.8 million for the three months ended March 31, 2021, compared to zero for the same period in 2020. La Jolla acquired Tetraphase, which commercialized XERAVA, on July 28, 2020.

La Jolla’s net income (loss) for the three months ended March 31, 2021 was $14.4 million, or $0.42 per diluted share, compared to $(8.6) million, or $(0.32) per diluted share, for the same period in 2020.

As of March 31, 2021 and December 31, 2020, La Jolla had cash and cash equivalents of $38.6 million and $21.2 million, respectively.

La Jolla’s net cash provided by (used for) operating activities for the three months ended March 31, 2021 was $17.2 million, compared to $(12.2) million for the same period in 2020. La Jolla’s net cash provided by (used for) operating activities excluding net receipts in connection with license agreements and payments related to reductions in headcount for the three months ended March 31, 2021 was $(1.8) million, compared to $(9.2) million for the same period in 2020. Net receipts in connection with license agreements were $19.8 million for the three months ended March 31, 2021, compared to zero for the same period in 2020. Payments related to reductions in headcount were $0.8 million for the three months ended March 31, 2021, compared to $3.0 million for the same period in 2020.

About GIAPREZA

GIAPREZA (angiotensin II) injection is approved by the U.S. Food and Drug Administration (FDA) as a vasoconstrictor indicated to increase blood pressure in adults with septic or other distributive shock. GIAPREZA is approved by the European Commission (EC) for the treatment of refractory hypotension in adults with septic or other distributive shock who remain hypotensive despite adequate volume restitution and application of catecholamines and other available vasopressor therapies. GIAPREZA mimics the body’s endogenous angiotensin II peptide, which is central to the renin-angiotensin-aldosterone system, which in turn regulates blood pressure. Prescribing information for GIAPREZA is available at http://www.giapreza.com. The European Summary of Product Characteristics is available at www.ema.europa.eu/en/medicines/human/EPAR/giapreza. GIAPREZA is marketed in the U.S. by La Jolla Pharmaceutical Company on behalf of La Jolla Pharma, LLC, its wholly owned subsidiary, and will be marketed in Europe by PAION AG on behalf of La Jolla Pharma, LLC.

GIAPREZA Important Safety Information

Contraindications

None.

Warnings and Precautions

There is a potential for venous and arterial thrombotic and thromboembolic events in patients who receive GIAPREZA. Use concurrent venous thromboembolism (VTE) prophylaxis.

Adverse Reactions

The most common adverse reactions that were reported in greater than 10% of GIAPREZA-treated patients were thromboembolic events.

Drug Interactions

Angiotensin converting enzyme (ACE) inhibitors may increase response to GIAPREZA. Angiotensin II receptor blockers (ARBs) may reduce response to GIAPREZA.

You are encouraged to report negative side effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch or call 1-800-FDA-1088.

For additional information, please see Full Prescribing Information for the United States and the Summary of Product Characteristics for the European Union.

About XERAVA

XERAVA (eravacycline) for injection is approved by the U.S. Food and Drug Administration (FDA) as a tetracycline class antibacterial indicated for the treatment of complicated intra-abdominal infections (cIAI) in patients 18 years of age and older. XERAVA is approved by the European Commission (EC) for the treatment of cIAI in adults. Prescribing information for XERAVA is available at www.xerava.com. The European Summary of Product Characteristics is available at www.ema.europa.eu/en/medicines/human/EPAR/xerava. XERAVA is marketed in the U.S. by Tetraphase Pharmaceuticals, Inc., a wholly owned subsidiary of La Jolla, and will be marketed in Europe by PAION AG on behalf of Tetraphase Pharmaceuticals, Inc. Everest, the Company’s licensee for mainland China, Taiwan, Hong Kong, Macau, South Korea, Singapore, the Malaysian Federation, the Kingdom of Thailand, the Republic of Indonesia, the Socialist Republic of Vietnam and the Republic of the Philippines, recently submitted an NDA in China.

XERAVA Important Safety Information

XERAVA is a tetracycline class antibacterial indicated for the treatment of complicated intra-abdominal infections in patients 18 years of age and older.

XERAVA is not indicated for the treatment of complicated urinary tract infections.

To reduce the development of drug-resistant bacteria and maintain the effectiveness of XERAVA and other antibacterial drugs, XERAVA should be used only to treat or prevent infections that are proven or strongly suspected to be caused by susceptible bacteria.

XERAVA is contraindicated for use in patients with known hypersensitivity to eravacycline, tetracycline-class antibacterial drugs or to any of the excipients. Life-threatening hypersensitivity (anaphylactic) reactions have been reported with XERAVA.

The use of XERAVA during tooth development (last half of pregnancy, infancy and childhood to the age of eight years) may cause permanent discoloration of the teeth (yellow-gray-brown) and enamel hypoplasia.

The use of XERAVA during the second and third trimester of pregnancy, infancy and childhood up to the age of eight years may cause reversible inhibition of bone growth.

Clostridium difficile associated diarrhea (CDAD) has been reported with use of nearly all antibacterial agents and may range in severity from mild diarrhea to fatal colitis.

The most common adverse reactions observed in clinical trials (incidence ≥ 3%) were infusion site reactions, nausea and vomiting.

XERAVA is structurally similar to tetracycline-class antibacterial drugs and may have similar adverse reactions. Adverse reactions including photosensitivity, pseudotumor cerebri and anti-anabolic action, which has led to increased blood urea nitrogen, azotemia, acidosis, hyperphosphatemia, pancreatitis and abnormal liver function tests, have been reported for other tetracycline-class antibacterial drugs, and may occur with XERAVA. Discontinue XERAVA if any of these adverse reactions are suspected.

You are encouraged to report negative side effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch or call 1-800-FDA-1088.

For additional information, please see Full Prescribing Information for the United States.

About La Jolla Pharmaceutical Company

La Jolla Pharmaceutical Company is dedicated to the development and commercialization of innovative therapies that improve outcomes in patients suffering from life-threatening diseases. GIAPREZA (angiotensin II) is approved by the U.S. FDA as a vasoconstrictor indicated to increase blood pressure in adults with septic or other distributive shock. XERAVA (eravacycline) is approved by the U.S. FDA for the treatment of complicated intra-abdominal infections. For more information, please visit www.ljpc.com.

Forward-looking Statements

This press release contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. We caution investors that forward-looking statements are based on management’s expectations and assumptions as of the date of this press release and involve substantial risks and uncertainties that could cause the actual outcomes to differ materially from what we currently expect. These risks and uncertainties include, but are not limited to, those associated with: GIAPREZA (angiotensin II) and XERAVA (eravacycline) sales; regulatory actions relating to La Jolla’s products by the U.S. FDA, European Commission, China National Medical Products Administration and/or other regulatory authorities; expected future cash flows of La Jolla, including upfront, milestone, royalty and other payments resulting from La Jolla’s out-license agreements and commercial supply agreements; and other risks and uncertainties identified in our filings with the U.S. Securities and Exchange Commission. Forward-looking statements in this press release apply only as of the date made, and we undertake no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

LA JOLLA PHARMACEUTICAL COMPANY Condensed Consolidated Balance Sheets (in thousands, except par value and share amounts)
		March 31,				December 31,
		2021				2020
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	38,634			$	21,221
Accounts receivable, net			4,153				5,834
Inventory, net			5,374				6,013
Prepaid expenses and other current assets			6,104				3,388
Total current assets			54,265				36,456
Goodwill			20,123				20,123
Intangible assets, net			14,485				14,873
Right-of-use lease assets			490				536
Property and equipment, net			186				215
Restricted cash			40				40
Total assets		$	89,589			$	72,243
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable		$	1,098			$	2,762
Accrued expenses			8,721				6,494
Accrued payroll and related expenses			1,693				2,878
Lease liabilities, current portion			196				204
Total current liabilities			11,708				12,338
Deferred royalty obligation, net			124,453				124,437
Accrued interest expense on deferred royalty obligation, less current portion			20,884				19,111
Lease liabilities, less current portion			294				332
Other noncurrent liabilities			4,568				4,112
Total liabilities			161,907				160,330
Commitments and contingencies
Shareholders’ deficit:
Common Stock, $0.0001 par value; 100,000,000 shares authorized, 27,448,571 and 27,402,648 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively			3				3
Series C-12 Convertible Preferred Stock, $0.0001 par value; 11,000 shares authorized, 3,906 shares issued and outstanding at March 31, 2021 and December 31, 2020; and liquidation preference of $3,906 at March 31, 2021 and December 31, 2020			3,906				3,906
Additional paid-in capital			986,107				984,756
Accumulated deficit			(1,062,334	)			(1,076,752	)
Total shareholders’ deficit			(72,318	)			(88,087	)
Total liabilities and shareholders’ deficit		$	89,589			$	72,243

LA JOLLA PHARMACEUTICAL COMPANY Condensed Consolidated Statements of Operations (in thousands, except per share amounts)
		Three Months Ended
		March 31,
		2021				2020
Revenue
Net product sales		$	8,637			$	7,591
License revenue			25,500				-
Total revenue			34,137				7,591
Operating expenses
Cost of product sales			2,731				716
Cost of license revenue			3,600				-
Selling, general and administrative			8,755				8,152
Research and development			1,558				9,183
Total operating expenses			16,644				18,051
Income (loss) from operations			17,493				(10,460	)
Other (expense) income
Interest expense			(2,609	)			(2,406	)
Interest income			2				190
Other income—related party			-				4,085
Other expense			(450	)			-
Total other (expense) income, net			(3,057	)			1,869
Income (loss) before income taxes			14,436				(8,591	)
Provision for income taxes			18				-
Net income (loss)		$	14,418			$	(8,591	)
Earnings (loss) per share
Basic		$	0.53			$	(0.32	)
Diluted		$	0.42			$	(0.32	)
Shares used in computing earnings (loss) per share
Basic			27,427				27,238
Diluted			34,183				27,238

LA JOLLA PHARMACEUTICAL COMPANY Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands)
		Three Months Ended
		March 31,
		2021				2020
Operating activities
Net income (loss)		$	14,418			$	(8,591	)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Share-based compensation expense			1,116				2,407
Depreciation expense			29				1,060
Non-cash interest expense			1,736				1,682
Inventory fair value step-up adjustment included in cost of product sales			850				-
Amortization of intangible assets			388				-
Loss on change in fair value of contingent value rights			450				-
Amortization of right-of-use lease assets			46				345
Loss on disposal of property and equipment			-				148
Changes in operating assets and liabilities:
Accounts receivable, net			1,681				(592	)
Inventory, net			(211	)			251
Prepaid expenses and other current assets			(2,716	)			1,084
Accounts payable			(1,664	)			(2,282	)
Accrued expenses			2,286				(2,404	)
Accrued payroll and related expenses			(1,185	)			(4,683	)
Lease liabilities			(46	)			(674	)
Net cash provided by (used for) operating activities			17,178				(12,249	)
Investing activities
Proceeds from the sale of property and equipment			-				1,143
Net cash provided by investing activities			-				1,143
Financing activities
Net proceeds from issuance of common stock under 2013 Equity Plan			154				305
Net proceeds from issuance of common stock under ESPP			81				200
Net cash provided by financing activities			235				505
Net increase (decrease) in cash, cash equivalents and restricted cash			17,413				(10,601	)
Cash, cash equivalents and restricted cash, beginning of period			21,261				88,729
Cash, cash equivalents and restricted cash, end of period		$	38,674			$	78,128
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents		$	38,634			$	77,219
Restricted cash			40				909
Total cash, cash equivalents and restricted cash		$	38,674			$	78,128

 

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