A.P. Pharma, Inc. (OTCQB:APPA.PK), a specialty pharmaceutical company, today reported financial results for its second quarter ended June 30, 2011 and highlighted its recent corporate progress.
“As a result of the study's timely start, we believe that we continue to be on track to resubmit the APF530 New Drug Application during the first half of 2012.”
- On May 2, 2011, A.P. Pharma closed a private placement financing for $1.5 million in convertible notes, with an additional $3.0 million available to the Company at the investors' discretion within two years of the closing date.
- On June 29, 2011, the Company announced it entered into a definitive agreement for a $24.0 million private placement of common stock and warrants. The financing closed on July 1, 2011.
- In July 2011, the Company enrolled its first patient in a thorough QT study for APF530. The study will examine the effect of APF530 on the QT interval in healthy volunteers. In order to start the thorough QT study promptly, the Company decided to separate this study from a planned metabolism study. The Company expects to report the results of both studies in Q1 2012.
"Following the close of our recent financing, we initiated the planned thorough QT study for APF530," said John Whelan, A.P. Pharma's president and chief executive officer. "As a result of the study's timely start, we believe that we continue to be on track to resubmit the APF530 New Drug Application during the first half of 2012."
Results of Operations
A.P. Pharma's net loss for the second quarter of 2011 was $1.9 million, or $0.05 per share, compared with a net loss of $3.6 million, or $0.09 per share, for the second quarter of 2010. The net loss was lower in the current fiscal quarter primarily due to expenses related to the resignation of the Company's former chief executive officer during the second quarter of 2010 and $0.6 million of lower spending in the current fiscal quarter related to the New Drug Application (NDA) resubmission. In May 2011, the Company received notice of termination from Merial Limited related to an agreement covering a product under development in the animal health care market. As a result, all remaining deferred revenues under this agreement were substantially recognized in the current fiscal quarter.
Cash and cash equivalents as of June 30, 2011 were $21.3 million compared with $2.1 million at December 31, 2010. Net cash used in operating activities was $2.6 million for the first half of 2011. The Company entered into two financing arrangements during the second quarter 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. In April 2011, the Company entered into definitive agreements with investors for a private placement of up to $4.5 million in convertible notes. The initial closing on May 2, 2011 provided funding of approximately $1.3 million, net of all transaction costs. The investors have the right to purchase up to $3.0 million of additional notes through May 2013. In June 2011, the Company entered into definitive agreements for a $24.0 million private placement of common stock and warrants. Approximately $20.3 million of advance proceeds were received in June 2011. The remaining $3.7 million was received in July 2011, totaling to $22.8 million of net proceeds at the closing date of the transaction. The Company believes the capital generated from these financings provide sufficient resources to fund operations into 2013. If the Company obtains U.S. Food and Drug Administration approval for APF530, it plans to seek strategic collaborative arrangements to commercialize APF530 or obtain additional financing and resources to launch APF530 without a partner. Multiple factors, including market conditions, may prevent the Company from obtaining financing or a collaborative arrangement that is adequate to fund operations or on terms favorable to A.P. Pharma or its stockholders.