A.P. Pharma Announces Fourth Quarter and Full Year 2011 Financial Results and Provides Update on APF530

Marketwired

REDWOOD CITY, CA--(Marketwire -03/26/12)- A.P. Pharma, Inc. (OTC.BB: APPA) today reported fourth quarter and full year 2011 financial results and provided an update on its lead product candidate, APF530, being developed for the prevention of both acute- and delayed-onset chemotherapy-induced nausea and vomiting (CINV).

"In 2011 we made solid progress on the work necessary to respond to the APF530 Complete Response Letter and to prepare the resubmission of the New Drug Application for APF530," said John B. Whelan, A.P. Pharma's president and chief executive officer. "The $24 million in funds raised last year provided the resources for us to complete a thorough QT study and other work requested by the FDA. We are targeting the resubmission of the APF530 New Drug Application for mid-2012 and anticipate our current funds will allow us to operate into 2013."

APF530 Update

  • A thorough QT study was completed showing that granisetron, the active drug used in APF530, does not have an effect on cardiac repolarization as measured by prolongation of the QT interval. The results of this study will be included in the resubmission of the New Drug Application (NDA).

  • A drug metabolism study was completed showing how the human body processes APF530. These results corroborated preclinical animal metabolism data. The results of this study will be included in the NDA resubmission.

  • The administration system for APF530 has been changed from a two-syringe system to a single-syringe system per the FDA's request. Formative human factors studies have been completed, and a validation study protocol is under review by the FDA. We plan to complete the human factors validation study in the second quarter of 2012 and include the results in the NDA resubmission.

  • The APF530 manufacturing process has been modified to allow for terminal sterilization of syringes as requested by the FDA. Manufacturing runs are on-going and data from these runs will be included in the NDA resubmission.

  • The Company is targeting the APF530 NDA resubmission for mid-2012.

Results of Operations

A.P. Pharma's net loss for the fourth quarter of 2011 was $4.3 million, or $0.02 per share, compared to a net loss of $1.6 million, or $0.04 per share, for the fourth quarter of 2010. The net loss was higher in the 2011 fiscal quarter primarily due to increased spending related to the planned NDA resubmission and higher personnel-related costs, including stock compensation expense.

Net loss for the fiscal year 2011 was $11.8 million, or $0.10 per share, compared with a net loss of $7.3 million, or $0.19 per share, for 2010. The higher net loss in 2011 was primarily due to a royalty milestone payment of $2.5 million received in 2010 and higher contract revenue in the prior year related to research and development work performed under an agreement with Merial Limited, which was terminated in May 2011.

Cash and cash equivalents as of December 31, 2011 were $18.0 million, compared to $2.1 million at December 31, 2010. Net cash used in operating activities was $7.7 million for the year ended December 31, 2011. As previously reported, the Company entered into two financing arrangements during the second quarter of 2011, which provided total funding of approximately $24.1 million, net of expenses. The Company believes that its current cash resources are sufficient to fund its operations into 2013.

About APF530

A.P. Pharma's lead product, APF530, is in development for the prevention of both acute-onset and delayed-onset chemotherapy-induced nausea and vomiting (CINV). APF530 contains the 5-HT3 receptor antagonist, granisetron, formulated in the Company's proprietary Biochronomer™ drug delivery system, which allows therapeutic drug levels to be maintained for five days with a single subcutaneous injection. Intravenous and oral formulations containing granisetron are approved for the prevention of acute-onset CINV, but not delayed-onset CINV. Granisetron was selected because it is widely prescribed by physicians based on a well-established record of safety and efficacy.

About A.P. Pharma

A.P. Pharma is a specialty pharmaceutical company developing products using its proprietary Biochronomer™ polymer-based drug delivery technology. The Company's primary focus is on its lead product, APF530, for the prevention of CINV. A.P. Pharma received a Complete Response Letter on the APF530 NDA and is targeting the resubmission of the NDA for mid-2012. The Company has additional research and development programs that utilize its bioerodible, injectable and implantable drug delivery systems. For further information, please visit the Company's web site at www.appharma.com.

 
                             A.P. Pharma, Inc.
                    Condensed Statements of Operations
                 (in thousands, except per share amounts)
                                (Unaudited)


                            Three Months Ended       Twelve Months Ended
                               December 31,              December 31,
                         ------------------------  ------------------------
                             2011         2010         2011         2010
                         ------------ -----------  ------------ -----------

Contract revenue         $         -  $       179  $       646  $     1,301
                         -----------  -----------  -----------  -----------

Operating expenses:
  Research and
   development                 2,855        1,502        8,207        7,264
  General and
   administrative              1,263          410        3,501        3,971
                         -----------  -----------  -----------  -----------
    Total operating
     expenses                  4,118        1,912       11,708       11,235
                         -----------  -----------  -----------  -----------
      Operating loss          (4,118)      (1,733)     (11,062)      (9,934)

Other income (expenses):
  Interest expense, net          (47)          (1)        (373)          (2)
  Other income                     -          240            -          240
  Gain on sale of
   royalty interest                -            -            -        2,500
                         -----------  -----------  -----------  -----------
    Total other income
     (expense)                   (47)         239         (373)       2,738
Net loss from continuing
 operations                   (4,165)      (1,494)     (11,435)      (7,196)
Loss from discontinued
 operations                      (96)        (102)        (379)        (150)
                         -----------  -----------  -----------  -----------
  Net loss               $    (4,261) $    (1,596) $   (11,814) $    (7,346)
                         ===========  ===========  ===========  ===========


Basic and diluted net
 loss per share:
  Loss from continuing
   operations            $     (0.02) $     (0.04) $     (0.10) $     (0.18)
                         ===========  ===========  ===========  ===========
  Net loss               $     (0.02) $     (0.04) $     (0.10) $     (0.19)
                         ===========  ===========  ===========  ===========

Shares used to compute
 basicand diluted net
 loss per share              200,035       39,813      120,263       39,671
                         ===========  ===========  ===========  ===========



                             A.P. Pharma, Inc.
                          Condensed Balance Sheets
                               (in thousands)



                                           December 31,      December 31,
                                               2011              2010
                                         ----------------  ----------------
                                            (Unaudited)
Assets
Current assets:
  Cash and cash equivalents              $         17,974  $          2,109
  Accounts receivable                                   -               110
  Prepaid expenses and other current
   assets                                             266               282
                                         ----------------  ----------------
    Total current assets                           18,240             2,501

Property and equipment, net                         1,075               357
Other long-term assets                                130                53
                                         ----------------  ----------------
      Total assets                       $         19,445  $          2,911
                                         ================  ================

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                       $          1,010  $            159
  Accrued expenses                                  1,498               461
  Accrued disposition costs                         1,082               703
  Convertible notes payable to related
   parties, net of discount                           103                 -
  Deferred revenue                                      -               237
                                         ----------------  ----------------
    Total current liabilities                       3,693             1,560

Deferred revenue                                        -                35
                                         ----------------  ----------------
      Total liabilities                             3,693             1,595
                                         ----------------  ----------------

Stockholders' equity:
  Common stock                                      2,002               401
  Additional paid-in capital                      173,989           149,340
  Accumulated deficit                            (160,239)         (148,425)
                                         ----------------  ----------------
    Total stockholders' equity                     15,752             1,316
                                         ----------------  ----------------
      Total liabilities and
       stockholders' equity              $         19,445  $          2,911
                                         ================  ================

Forward-looking Statements

This news release contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including uncertainties associated with capital resources and liquidity, timely development and regulatory approval of product candidates, satisfactory completion of clinical studies, progress in research and development programs, launch and acceptance of new products 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.

Editor's Note:

A.P. Pharma today announced two additional press releases, which can be accessed on the Company's website at www.appharma.com. These releases included:

  • APF530 Thorough QT Study Showed No Effect on Cardiac Repolarization
  • A.P. Pharma Appoints Thomas Ottoboni, Ph.D. as Vice President of Pharmaceutical Development

Contact:
Contacts
Investor Relations
Michael Rice
Office Phone: 646-597-6979
Mobile Phone: 917-282-3242
Email: mrice@lifesciadvisors.com
and
Corporate
John B. Whelan
President, Chief Executive Officer and Chief Financial Officer
Office Phone: 650-366-2626

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