A.P. Pharma fourth quarter revenue decreases to $1.6 million

Mar 28 2011

A.P. Pharma, Inc. (NASDAQ:APPA), a specialty pharmaceutical company, today reported financial results for its fourth quarter and full year ended December 31, 2010 and provided a corporate update.

"Since receiving the Complete Response Letter on our APF530 New Drug Application, A.P. Pharma's management and staff have been working to address the issues raised by the Food and Drug Administration (FDA) and to prepare for meetings with the FDA," said John Whelan, A.P. Pharma's acting chief executive officer. "Company representatives met with the FDA in February and have another meeting scheduled for this week. We believe that our discussions with the FDA will provide the necessary clarity for what work and information will be needed to best address the topics outlined in the Complete Response Letter. Following our meetings with the FDA, we expect to be in a position to determine the resources and timeline needed for resubmitting the APF530 New Drug Application."

Clinical Update

The Company met with the FDA in February 2011. At this meeting, the Company presented information concerning the clinical pharmacology of APF530 and a revised presentation format for certain clinical data from the Company's Phase 3 study. The FDA indicated that the revised presentation format for the clinical data was acceptable for resubmission and did not request any additional efficacy studies. The FDA has requested that a thorough QT study be included in the New Drug Application (NDA) resubmission and clarified the requirements for a previously requested metabolism study. The FDA agreed both studies could be structured as a single clinical study conducted in healthy volunteers. Once initiated, this study is anticipated to take approximately six months to complete.

A second FDA meeting is scheduled for the end of March 2011 to address the dosing system and the characterization and manufacturing of APF530. During this meeting, the Company will be presenting the results of additional analytical work it has completed since receipt of the Complete Response Letter.

Corporate Developments

The Company is in negotiations for a bridge loan, which may be executed following the upcoming meeting with the FDA. The bridge loan is intended to fund Company operations until additional longer-term financing is secured. Following the FDA meeting at the end of March and the assumed funding of the bridge loan, the Company plans to seek additional financing in the form of equity, debt or collaboration agreements to fund operations through the potential approval of APF530. Multiple factors, including the outcome of the second FDA meeting and general market conditions, preclude any assurance that the Company will be able to obtain adequate financing to support its operations, or that such financing will be on terms favorable to A.P. Pharma or its stockholders.

The Company has notified The NASDAQ Stock Market (NASDAQ) that it will not be proceeding with the plan it presented to the NASDAQ Listing Qualifications Panel in January 2011. As a result, the Company anticipates it will receive a notice from NASDAQ that its shares will be delisted from The NASDAQ Capital Market and transferred to the OTCQB, which is operated by OTC Markets, Inc.

Results of Operations

A.P. Pharma's net loss for the fourth quarter of 2010 was $1.6 million, or $0.04 per share, compared with a net loss of $1.9 million, or $0.05 per share, for the fourth quarter of 2009. Net loss was lower in the current fiscal quarter primarily due to the receipt of a $0.2 million non-taxable grant under the Qualifying Therapeutics Discovery Project program and $0.3 million of lower spending resulting from continuing cost containment actions undertaken by the Company. These reductions to the current quarter loss were partially offset by a $0.2 million increase in loss from discontinued operations.

Net loss for the fiscal year 2010 was $7.3 million, or $0.19 per share, compared with a net loss of $10.0 million, or $0.31 per share, for 2009. The lower net loss is primarily due to a royalty milestone payment of $2.5 million received in the first quarter of 2010.

Cash and cash equivalents as of December 31, 2010 were $2.1 million, compared with $7.6 million at December 31, 2009. The Company believes it has sufficient cash resources to fund operations into May 2011 as it continues to defer certain discretionary activities.