A.P. Pharma second quarter 2010 net loss decreases to $0.09 per share

Aug 16 2010

A.P. Pharma, Inc. (NASDAQ: APPA), a specialty pharmaceutical company, today reported financial results for its second quarter ended June 30, 2010.

“We are working expeditiously to complete the work needed to prepare for a meeting with the FDA. Once the necessary information is available, we will request an End of Review meeting to discuss the next steps for the APF530 New Drug Application.”

Operational Highlights

In May, the Company engaged a leading regulatory consulting group to lead the U.S. Food and Drug Administration (FDA) review process and assist in preparing its resubmission of a New Drug Application (NDA) for APF530. The Company continues to work diligently toward the NDA resubmission and plans to meet with the FDA prior to resubmitting the NDA.

"A.P. Pharma is committed to addressing the issues raised in the FDA's Complete Response Letter in a thorough and thoughtful manner," said John Whelan, A.P. Pharma's acting chief executive officer. "We are working expeditiously to complete the work needed to prepare for a meeting with the FDA. Once the necessary information is available, we will request an End of Review meeting to discuss the next steps for the APF530 New Drug Application."

"APF530 has the potential to be the first drug to treat both acute-onset and delayed-onset chemotherapy-induced nausea and vomiting with a single, subcutaneous injection," said Paul Goddard, Ph.D., A.P. Pharma's board chairman. "We believe APF530 could become an important alternative for patients and physicians dealing with one of the major morbidities associated with chemotherapy, namely nausea and vomiting."

Results of Operations

A.P. Pharma's net loss for the second quarter of 2010 was $3.6 million, or $0.09 per share, compared with a net loss of $3.9 million, or $0.13 per share, for the second quarter of 2009. Net loss was slightly lower due to lower clinical trial spending and continuing cost containment actions undertaken by the Company, offset in part by expenses related to the resignation of the Company's former chief executive officer during the second quarter of 2010.

Contract revenue was $530,000 in the second quarter of 2010 compared with $14,000 for the second quarter of 2009. The increase in revenue in 2010 was primarily related to research and development work performed under an agreement with Merial Limited entered into in September 2009 for a long-acting pain management product for companion animals.

Cash and cash equivalents as of June 30, 2010 were $5.7 million, compared with $7.6 million at December 31, 2009. On March 19, 2010, A.P. Pharma announced the receipt of a Complete Response Letter from the FDA on the APF530 NDA. In the letter, the FDA raised questions that preclude the approval of the APF530 NDA in its current form. The full extent of activities, costs and time required to address the FDA's questions is not currently known; however, A.P. Pharma expects to clarify the actions required for resubmission and approval of its NDA at an End of Review meeting. Based on a current analysis of anticipated expenses to prepare for an End of Review meeting, the Company now believes it has sufficient cash resources to fund operations through the end of 2010. A.P. Pharma plans to seek debt or equity financing to fund operations beyond the end of 2010. Multiple factors, including market conditions, may prevent the Company from obtaining adequate financing to support its operations. The sale of additional equity or convertible debt securities in the future may be dilutive to the Company's stockholders, and debt financing arrangements may require it to pledge certain assets and enter into covenants that could restrict certain business activities or the Company's ability to incur further indebtedness and may contain other terms that are not favorable to A.P. Pharma or its stockholders.