A.P. Pharma's third quarter net loss increases to $4.2 million

A.P. Pharma, Inc. (OTCQB: APPA.PK), a specialty pharmaceutical company, today reported financial results for its third quarter ended September 30, 2011 and highlighted its recent corporate progress.

“Steady progress is being made toward our goal of resubmitting the New Drug Application for APF530 in the first half of 2012”

Operational Highlights

• On July 1, 2011, the Company closed a $24.0 million private placement of common stock and warrants.
• In July 2011, the Company commenced a thorough QT study designed to support the New Drug Application (NDA) resubmission for APF530. The study will examine the effect of APF530 on the QT interval in healthy volunteers. The Company expects to report results from this study in the first quarter of 2012.

"Steady progress is being made toward our goal of resubmitting the New Drug Application for APF530 in the first half of 2012," said John Whelan, A.P. Pharma's president and chief executive officer. "We continue to believe that APF530 could improve the lives of many cancer patients suffering from one of the major side effects associated with their treatment, namely chemotherapy-induced nausea and vomiting. APF530 has the potential to be the first product to address both acute- and delayed-onset nausea and vomiting with a single, subcutaneous injection at the time of chemotherapy administration, providing an important treatment option for patients and physicians."

Results of Operations

A.P. Pharma's net loss for the third quarter of 2011 was $4.2 million, or $0.02 per share, compared to a net loss of $1.7 million, or $0.04 per share, for the third quarter of 2010. The net loss was higher in the current fiscal quarter primarily due to increased spending related to the planned NDA resubmission and higher stock compensation expense. In addition, the prior-year quarter included contract revenue 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 September 30, 2011 were $21.0 million, compared to $2.1 million at December 31, 2010. Net cash used in operating activities was $5.2 million for the nine months ended September 30, 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. All proceeds were received in the second quarter except for $3.7 million, which was received in July 2011. The Company continues to believe that its current cash resources are sufficient to fund its operations into 2013.