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þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 33-0361285 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices, including Zip Code)
Large accelerated filero | Accelerated filero | Non-accelerated filero | Smaller reporting companyþ | |||
(Do not check if a smaller reporting company) |
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Exhibit 31.1 | ||||||||
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Exhibit 32.1 |
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Item 1. | Business |
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• | Sell or out-license our Riquent program, although we may not receive any significant value upon any such sale or license; |
• | Pursue potential other strategic transactions for new technologies, which could include mergers, license agreements or other collaborations, with third parties where we acquire new compounds for development and seek additional capital; or |
• | Implement a wind down of the Company if other alternatives are not deemed viable and in the best interests of the Company. |
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Item 1A. | Risk Factors |
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• | limited financial resources; |
• | announcements regarding mergers or other strategic transactions; |
• | future sales of significant amounts of our common stock by us or our stockholders; |
• | developments in patent or other proprietary rights; |
• | developments concerning potential agreements with collaborators; and |
• | general market conditions and comments by securities analysts. |
Item 1B. | Unresolved Staff Comments. |
Item 2. | Properties. |
Item 3. | Legal Proceedings. |
Item 4. | Reserved. |
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Item 5. | Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Prices | ||||||||
High | Low | |||||||
Year Ended December 31, 2009 | ||||||||
First Quarter | $ | 3.20 | $ | 0.04 | ||||
Second Quarter | 0.64 | 0.13 | ||||||
Third Quarter | 0.36 | 0.14 | ||||||
Fourth Quarter | 0.32 | 0.06 | ||||||
Year Ended December 31, 2008 | ||||||||
First Quarter | $ | 4.25 | $ | 1.45 | ||||
Second Quarter | 2.35 | 1.59 | ||||||
Third Quarter | 2.50 | 1.01 | ||||||
Fourth Quarter | 1.20 | 0.43 |
Item 6. | Selected Financial Data |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
• | Overview and recent developments. This section provides a general description of our business and operating history and a general description of recent events and significant transactions that we believe are important in understanding our financial condition and results of operations. |
• | Critical accounting policies and estimates. This section contains a discussion of the accounting policies that we believe are important to our financial condition and results of operations and that require significant judgment and estimates on the part of management in their application. In addition, all of our significant accounting policies, including the critical accounting policies and estimates, are summarized in Note 1 to the accompanying consolidated financial statements. |
• | Results of operations. This section provides an analysis of our results of operations presented in the accompanying consolidated statements of operations by comparing the results for the year ended December 31, 2009 to the results for the year ended December 31, 2008. |
• | Liquidity and capital resources. This section provides an analysis of our cash flows as well as material subsequent changes. |
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• | Sell or out-license our Riquent program, although we may not receive any significant value upon such a sale or license; |
• | Pursue potential other strategic transactions, which could include mergers, license agreements or other collaborations, with third parties; or |
• | Implement a wind down of the Company if other alternatives are not deemed viable and in the best interests of the Company. |
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We apply the revenue recognition criteria outlined in theASC Topic of Revenue Recognition. Upfront product and technology license fees under multiple-element arrangements are deferred and recognized over the period of such services or performance if such arrangements require on-going services or performance. Non-refundable amounts received for substantive milestones are recognized upon achievement of the milestone. Any amounts received prior to satisfying our revenue recognition criteria are recorded as deferred revenue in the accompanying consolidated balance sheets.
Our sole source of revenue in the accompanying consolidated financial statements related to a January 4, 2009 Development Agreement with BioMarin CF which contained multiple potential revenue elements, including non-refundable upfront fees. The Development Agreement was terminated on March 27, 2009 following the failure of the Phase 3 ASPEN trial at which time we had no remaining on-going services or performance. We recognized $8.1 million as collaboration revenue upon termination of the Development Agreement.
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• | our ability to sell, out-license or otherwise dispose of our Riquent program; |
• | our ability to consummate a strategic transaction such as a merger, license agreement or other collaboration with a third party; or |
• | our implementation of a wind down of the Company if other alternatives are not deemed viable and in the best interests of the Company; |
Item 8. | Financial Statements and Supplementary Data. |
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Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
Item 9A(T). | Controls and Procedures. |
• | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
• | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
• | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
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Item 9B. | Other Information. |
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Item 10. | Directors, Executive Officers and Corporate Governance. |
Name | Age | Position(s) | ||
Craig R. Smith, M.D. | 64 | Director, Chairman of the Board | ||
Deirdre Y. Gillespie, M.D. | 53 | President, Chief Executive Officer and Assistant Secretary | ||
Gail A. Sloan, CPA | 47 | Vice President of Finance and Secretary | ||
Robert A. Fildes, Ph.D. | 71 | Director | ||
Stephen M. Martin | 63 | Director | ||
Frank E. Young, M.D., Ph.D. | 78 | Director |
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Item 11. | Executive Compensation. |
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Non-Equity | ||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | All Other | |||||||||||||||||||||||||||||
Name and | Salary | Awards | Awards | Compensation | Compensation | Total | ||||||||||||||||||||||||||
Principal Position | Year | ($) | Bonus ($) (1) | ($) | ($) (2) | ($) (3) | ($) | ($) | ||||||||||||||||||||||||
Current Officers Deirdre Y. Gillespie, M.D. | 2009 | $ | 421,200 | $ | 202,800 | $ | — | $ | 1,167,161 | $ | — | $ | — | $ | 1,791,161 | |||||||||||||||||
President, Chief Executive Officer and Assistant Secretary | 2008 | 402,600 | — | — | 1,093,763 | 200,772 | — | 1,697,135 | ||||||||||||||||||||||||
Gail A. Sloan | 2009 | 206,187 | 66,184 | — | 71,785 | — | — | 344,156 | ||||||||||||||||||||||||
Vice President of Finance and Secretary | 2008 | 196,906 | — | — | 307,483 | 53,609 | — | 557,998 | ||||||||||||||||||||||||
Former Officers* Niv E. Caviar | 2009 | 124,734 | 211,612 | — | 635,453 | — | — | 971,799 | ||||||||||||||||||||||||
Executive Vice President, Chief Business and Financial Officer | 2008 | 280,775 | — | — | 226,995 | 111,097 | 25,000 | (4) | 643,867 | |||||||||||||||||||||||
Michael Tansey, M.D., Ph.D. | 2009 | 113,402 | 251,063 | — | 572,250 | — | — | 936,715 | ||||||||||||||||||||||||
Executive Vice President and Chief Medical Officer | 2008 | 332,875 | — | — | 387,029 | 90,383 | — | 810,287 |
* | These former officers were terminated on April 20, 2009 as part of the Company’s restructuring activities, as described above. | |
(1) | The amounts for Dr. Gillespie and Ms. Sloan are retention payments made on December 18, 2009 in accordance with the Retention Agreements dated December 4, 2009. See Note 6 to our audited consolidated financial statements. The amount for Mr. Caviar is severance equal to nine months of Mr. Caviar’s annual base salary at December 31, 2008 pursuant to his employment agreement dated May 10, 2007. The amount for Dr. Tansey is severance equal to nine months of Dr. Tansey’s annual base salary at December 31, 2008 pursuant to his employment agreement dated December 4, 2006. These severance payments were made to Mr. Caviar and Dr. Tansey following their respective terminations on April 20, 2009. | |
(2) | The amounts in this column reflect the dollar amount recognized for financial statement reporting purposes for the fiscal years ended December 31, 2009 and December 31, 2008, for awards and thus may include amounts from awards granted in and prior to 2008. Assumptions used in the calculation of these amounts are included in Note 1 to our audited consolidated financial statements. | |
(3) | These amounts represent the 2008 performance-based bonus awards which were paid in fiscal year 2009. | |
(4) | This amount represents a signing bonus paid to Mr. Caviar in January 2008 in accordance with his employment agreement. |
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Market or | ||||||||||||||||||||||||
Number of | Number of | Payout Value of | ||||||||||||||||||||||
Securities | Securities | Number of | Unearned | |||||||||||||||||||||
Underlying | Underlying | Unearned Shares, | Shares, Units or | |||||||||||||||||||||
Unexercised | Unexercised | Option | Units or Other | Other Rights | ||||||||||||||||||||
Options | Options | Exercise | Option | Rights that have not | that have not | |||||||||||||||||||
(#) | (#) | Price | Expiration | Vested | Vested | |||||||||||||||||||
Name | Exercisable | Unexercisable | ($) | Date(1) | (#) | ($) | ||||||||||||||||||
Current Officers Deirdre Y. Gillespie | 766,666 | 33,333 | (2) | $ | 5.26 | 03/15/2016 | ||||||||||||||||||
106,250 | 43,750 | (2) | 3.08 | 02/05/2017 | ||||||||||||||||||||
68,750 | 81,250 | (2) | 2.42 | 02/21/2018 | ||||||||||||||||||||
34,375 | 115,625 | (2) | 1.42 | 01/22/2019 | ||||||||||||||||||||
1,411,898 | (3) | $ | 240,023 | (4) | ||||||||||||||||||||
Gail A. Sloan | 972 | — | 18.44 | 01/28/2010 | ||||||||||||||||||||
3,800 | — | 35.00 | 11/20/2010 | |||||||||||||||||||||
3,000 | — | 38.25 | 07/19/2011 | |||||||||||||||||||||
2,999 | — | 35.50 | 12/14/2011 | |||||||||||||||||||||
5,999 | — | 25.45 | 07/18/2012 | |||||||||||||||||||||
5,999 | — | 29.50 | 11/21/2012 | |||||||||||||||||||||
5,999 | — | 14.85 | 05/12/2013 | |||||||||||||||||||||
6,000 | — | 23.55 | 09/18/2013 | |||||||||||||||||||||
14,000 | — | 14.80 | 05/21/2014 | |||||||||||||||||||||
10,583 | — | 2.40 | 04/25/2015 | |||||||||||||||||||||
5,415 | — | 2.15 | 05/19/2015 | |||||||||||||||||||||
21,199 | — | 4.20 | 10/10/2015 | |||||||||||||||||||||
184,548 | — | 4.46 | 04/17/2016 | |||||||||||||||||||||
17,708 | 7,291 | (2) | 3.08 | 02/05/2017 | ||||||||||||||||||||
11,458 | 13,541 | (2) | 2.42 | 02/21/2018 | ||||||||||||||||||||
5,729 | 19,270 | (2) | 1.42 | 01/22/2019 | ||||||||||||||||||||
483,810 | (3) | $ | 82,248 | (4) | ||||||||||||||||||||
Former Officer* Michael J.B. Tansey | 113,000 | (5) | — | 3.61 | 07/17/2016 | |||||||||||||||||||
87,000 | (5) | — | 3.23 | 12/04/2016 | ||||||||||||||||||||
50,000 | (5) | — | 5.47 | 05/23/2017 | ||||||||||||||||||||
40,000 | (5) | — | 2.42 | 02/21/2018 | ||||||||||||||||||||
200,000 | (5) | — | 1.82 | 05/22/2018 | ||||||||||||||||||||
45,000 | (5) | — | 1.42 | 01/22/2019 |
* | This former officer was terminated on April 20, 2009. | |
(1) | All stock options expire ten years from the date of grant. | |
(2) | The stock options vest and become exercisable ratably on a monthly basis over four years from the date of grant. | |
(3) | These are restricted stock units (“RSUs”) granted on December 31, 2009 where each RSU represents a contingent right to receive one share of our common stock. The RSUs were to vest upon the closing of the Merger, subject to the continued employment of the recipient through the closing date of the Merger; however, the Merger was terminated in March 2010 and accordingly, the RSUs were accordingly cancelled. | |
(4) | The value of each RSU is the closing price of our common stock on the date of grant, which was $0.17. | |
(5) | Pursuant to Dr. Tansey’s employment agreement dated December 4, 2006, all of Dr. Tansey’s unvested options automatically vested upon his termination date of April 20, 2009 and remain exercisable for one year following the termination date. If not exercised by April 20, 2010, all of Dr. Tansey’s stock options will be cancelled on April 20, 2010. |
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Fees Earned or | ||||||||||||||||
Paid in Cash | Stock Awards | Option Awards | Total | |||||||||||||
Name | ($) | ($) | ($) (1) | ($) | ||||||||||||
Thomas H. Adams (2) | $ | 24,500 | $ | — | $ | 19,139 | $ | 43,639 | ||||||||
Robert A. Fildes | 37,500 | — | 19,139 | 56,639 | ||||||||||||
Stephen M. Martin | 51,000 | — | 19,139 | 70,139 | ||||||||||||
Craig R. Smith | 62,750 | — | 18,619 | 81,369 | ||||||||||||
Martin P. Sutter (2) | — | — | 6,206 | 6,206 | ||||||||||||
James N. Topper (2) | — | — | 6,206 | 6,206 | ||||||||||||
Frank E. Young | 29,500 | — | 6,206 | 35,706 |
(1) | The amounts in this column reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2009, and thus may include amounts from awards granted in and prior to 2009. Assumptions used in the calculation of these amounts are included in Note 1 to our consolidated financial statements. | |
(2) | Doctors Adams and Topper and Mr. Sutter resigned as directors effective September 3, 2009. |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
Number of | ||||||||||||
Securities | ||||||||||||
Remaining | ||||||||||||
Available for | ||||||||||||
Number of | Future Issuance | |||||||||||
Securities to be | Weighted- | Under Equity | ||||||||||
Issued upon | Average Exercise | Compensation | ||||||||||
Exercise of | Price of | Plans (Excluding | ||||||||||
Outstanding | Outstanding | Securities | ||||||||||
Options, Warrants | Options, Warrants | Reflected in | ||||||||||
and Rights | and Rights | Column (a)) | ||||||||||
Plan Category | ||||||||||||
Equity Compensation plans approved by security holders | 5,529,591 | (1) | $ | 6.99 | 1,082,671 | (2) | ||||||
Equity Compensation plans not approved by security holders | — | — | — |
(1) | Outstanding options to purchase shares of our common stock under the La Jolla Pharmaceutical Company 1994 Stock Incentive Plan and the 2004 Plan. | |
(2) | Includes 1,065,694 shares subject to the 2004 Plan and 16,977 shares subject to the 1995 Plan (each stated as of December 31, 2009). |
• | each of our directors; | ||
• | each of our “named executive officers” as defined by SEC rules; | ||
• | all of our current directors and executive officers as a group; and | ||
• | each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock. |
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Shares | ||||||||||||||||
Shares of | with Right to | |||||||||||||||
Common | Acquire | Total | Percentage | |||||||||||||
Stock | within 60 | Beneficial | of Common | |||||||||||||
Name and Address | Owned | Days | Ownership | Stock | ||||||||||||
Essex Woodlands Health Ventures Fund VI, L.P. and affiliates | — | 4,139,014 | 4,139,014 | 5.9 | % | |||||||||||
Craig R. Smith, M.D.(1) | — | 123,400 | 123,400 | * | % | |||||||||||
Robert A. Fildes, Ph.D.(1) | — | 97,759 | 97,759 | * | % | |||||||||||
Stephen M. Martin(1) | 40 | 105,400 | 105,440 | * | % | |||||||||||
Frank E. Young, M.D., Ph.D.(1) | 5,600 | 38,000 | 43,600 | * | % | |||||||||||
Deirdre Y. Gillespie, M.D.(1)(2) | — | 1,046,875 | 1,046,875 | 1.6 | % | |||||||||||
Gail A. Sloan(2) | — | 310,686 | 310,686 | * | % | |||||||||||
Michael J.B. Tansey, M.D.(3) | — | 535,000 | 535,000 | * | % | |||||||||||
All current executive officers and directors as a group (6 persons)(4) | 5,640 | 1,722,120 | 1,727,760 | 2.6 | % |
* | Less than one percent. | |
(1) | Current director as of March 5, 2010. | |
(2) | Current executive officer as of March 5, 2010. | |
(3) | Former executive officer terminated April 20, 2009. | |
(4) | The six current executive officers and directors are comprised of Dr. Smith, Dr. Fildes, Mr. Martin, Dr. Young, Dr. Gillespie and Ms. Sloan (each of whom is included within the table above). |
Item 14. | Principal Accountant Fees and Services. |
2008 | 2009 | |||||||
Audit Fees | $ | 298,861 | $ | 141,210 | ||||
Audit Related Fees | — | — | ||||||
Tax Fees | 87,000 | 17,000 | ||||||
All Other Fees | 45,000 | — | ||||||
Total | $ | 430,861 | $ | 158,210 | ||||
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1. | The following consolidated financial statements of La Jolla Pharmaceutical Company are filed as part of this report under Item 8 — Financial Statements and Supplementary Data: |
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F-2 | ||||
F-3 | ||||
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LA JOLLA PHARMACEUTICAL COMPANY | ||||
By: | /s/ Deirdre Y. Gillespie | |||
April 15, 2010 | Deirdre Y. Gillespie, M.D. | |||
President, Chief Executive Officer and Assistant Secretary | ||||
Signature | Title | Date | ||
/s/ Deirdre Y. Gillespie | President, Chief Executive Officer and Assistant Secretary (Principal Executive Officer) | April 15, 2010 | ||
/s/ Gail A. Sloan | Vice President of Finance and Secretary (Principal Financial and Accounting Officer) | April 15, 2010 | ||
/s/ Robert A. Fildes | Director | April 15, 2010 | ||
/s/ Stephen M. Martin | Director | April 15, 2010 | ||
/s/ Craig R. Smith | Director | April 15, 2010 | ||
/s/ Frank E. Young | Director | April 15, 2010 |
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April 15, 2010
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December 31, | ||||||||
2009 | 2008 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,254 | $ | 9,447 | ||||
Short-term investments, available-for-sale | — | 10,000 | ||||||
Prepaids and other current assets | 586 | 785 | ||||||
Total current assets | 4,840 | 20,232 | ||||||
Property and equipment, net | — | 357 | ||||||
Patent costs and other assets, net | — | 250 | ||||||
$ | 4,840 | $ | 20,839 | |||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 125 | $ | 4,626 | ||||
Accrued clinical/regulatory expenses | — | 3,957 | ||||||
Accrued expenses | 323 | 1,008 | ||||||
Accrued payroll and related expenses | 173 | 1,549 | ||||||
Credit facility | — | 5,933 | ||||||
Current portion of obligations under notes payable | — | 152 | ||||||
Current portion of obligations under capital leases | — | 11 | ||||||
Total current liabilities | 621 | 17,236 | ||||||
Non-current portion of obligations under notes payable | — | 179 | ||||||
Non-current portion of obligations under capital leases | — | 34 | ||||||
Commitments | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.01 par value; 8,000,000 shares authorized, no shares issued or outstanding | — | — | ||||||
Common stock, $0.01 par value; 225,000,000 shares authorized, 65,722,648 and 55,549,528 shares issued and outstanding at December 31, 2009 and 2008, respectively | 657 | 555 | ||||||
Additional paid-in capital | 427,883 | 418,522 | ||||||
Accumulated deficit | (424,321 | ) | (415,687 | ) | ||||
Total stockholders’ equity | 4,219 | 3,390 | ||||||
$ | 4,840 | $ | 20,839 | |||||
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Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
Revenue from collaboration agreement | $ | 8,125 | $ | — | ||||
Expenses: | ||||||||
Research and development | 9,576 | 51,025 | ||||||
General and administrative | 7,193 | 9,702 | ||||||
Asset impairments | — | 2,810 | ||||||
Total expenses | 16,769 | 63,537 | ||||||
Loss from operations | (8,644 | ) | (63,537 | ) | ||||
Interest expense | (13 | ) | (96 | ) | ||||
Interest and other income | 23 | 779 | ||||||
Net loss | $ | (8,634 | ) | $ | (62,854 | ) | ||
Basic and diluted net loss per share | $ | (0.14 | ) | $ | (1.26 | ) | ||
Shares used in computing basic and diluted net loss per share | 63,326 | 49,689 | ||||||
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For the Years Ended December 31, 2008 and 2009
(In thousands)
Additional | Other | Total | ||||||||||||||||||||||||||||||
Preferred stock | Common stock | paid-in | comprehensive | Accumulated | stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | capital | income (loss) | deficit | equity | |||||||||||||||||||||||||
Balance at December 31, 2007 | — | $ | — | 39,630 | $ | 396 | $ | 385,944 | $ | 14 | $ | (352,833 | ) | $ | 33,521 | |||||||||||||||||
Issuance of common stock, net | — | — | 15,615 | 156 | 27,877 | — | — | 28,033 | ||||||||||||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan | — | — | 304 | 3 | 287 | — | — | 290 | ||||||||||||||||||||||||
Exercise of stock options | — | — | 1 | — | 3 | — | — | 3 | ||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 4,411 | — | — | 4,411 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (62,854 | ) | (62,854 | ) | ||||||||||||||||||||||
Net unrealized losses on available-for-sale securities | — | — | — | — | — | (14 | ) | — | (14 | ) | ||||||||||||||||||||||
Comprehensive loss | (62,868 | ) | ||||||||||||||||||||||||||||||
Balance at December 31, 2008 | — | — | 55,550 | 555 | 418,522 | — | (415,687 | ) | 3,390 | |||||||||||||||||||||||
Issuance of preferred stock | 339 | 3 | — | — | 6,807 | — | — | 6,810 | ||||||||||||||||||||||||
Conversion of preferred stock, net | (339 | ) | (3 | ) | 10,173 | 102 | (99 | ) | — | — | — | |||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 2,653 | — | — | 2,653 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (8,634 | ) | (8,634 | ) | ||||||||||||||||||||||
Balance at December 31, 2009 | — | $ | — | 65,723 | $ | 657 | $ | 427,883 | $ | — | $ | (424,321 | ) | $ | 4,219 | |||||||||||||||||
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(In thousands)
Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
Operating activities | ||||||||
Net loss | $ | (8,634 | ) | $ | (62,854 | ) | ||
Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
Depreciation and amortization | 117 | 990 | ||||||
(Gain) loss on write-off/disposal of patents, property and equipment | (347 | ) | 199 | |||||
Loss on impairment of patents, property and equipment and licenses | — | 2,810 | ||||||
Share-based compensation expense | 2,653 | 4,411 | ||||||
Expense reduction from settlement of vendor obligations | (2,743 | ) | — | |||||
Amortization of investment premium/discount | — | 240 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaids and other current assets | 199 | 233 | ||||||
Accounts payable and accrued liabilities | (6,400 | ) | 442 | |||||
Accrued payroll and related expenses | (1,376 | ) | 350 | |||||
Net cash used for operating activities | (16,531 | ) | (53,179 | ) | ||||
Investing activities | ||||||||
Sales of short-term investments | 10,000 | 24,665 | ||||||
Net proceeds from sale of patents and property and equipment | 861 | 44 | ||||||
Additions to property and equipment | (18 | ) | (506 | ) | ||||
Increase in patent costs and other assets | (6 | ) | (116 | ) | ||||
Net cash provided by investing activities | 10,837 | 24,087 | ||||||
Financing activities | ||||||||
Net proceeds from issuance of common stock | — | 28,326 | ||||||
Net proceeds from issuance of preferred stock | 6,810 | — | ||||||
Proceeds from credit facility | — | 6,000 | ||||||
Payments on credit facility | (5,933 | ) | — | |||||
Payments on obligations under notes payable | (331 | ) | (151 | ) | ||||
Payments on obligations under capital leases | (45 | ) | (9 | ) | ||||
Net cash provided by financing activities | 501 | 34,166 | ||||||
(Decrease) increase in cash and cash equivalents | (5,193 | ) | 5,074 | |||||
Cash and cash equivalents at beginning of period | 9,447 | 4,373 | ||||||
Cash and cash equivalents at end of period | $ | 4,254 | $ | 9,447 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | 13 | $ | 96 | ||||
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The Company applies the revenue recognition criteria outlined in theASC Topic of Revenue Recognition. Upfront product and technology license fees under multiple-element arrangements are deferred and recognized over the period of such services or performance if such arrangements require on-going services or performance. Non-refundable amounts received for substantive milestones are recognized upon achievement of the milestone. Any amounts received prior to satisfying the Company’s revenue recognition criteria are recorded as deferred revenue in the accompanying consolidated balance sheets.
The Company’s sole source of revenue in the consolidated financial statements related to a January 4, 2009 Development Agreement with BioMarin CF which contained multiple potential revenue elements, including non-refundable upfront fees. The Development Agreement was terminated on March 27, 2009 following the failure of the Phase 3 ASPEN trial at which time the Company had no remaining on-going services or performance. The Company recognized $8,125,000 as collaboration revenue upon termination of the Development Agreement.
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December 31, | ||||||||
2009 | 2008 | |||||||
Laboratory equipment | $ | — | $ | 6,171 | ||||
Computer equipment and software | 2,186 | 4,654 | ||||||
Furniture and fixtures | — | 477 | ||||||
Leasehold improvements | — | 3,275 | ||||||
2,186 | 14,577 | |||||||
Less: Accumulated depreciation | (2,186 | ) | (14,220 | ) | ||||
$ | — | $ | 357 | |||||
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December 31, | ||||||||
2009 | 2008 | |||||||
Research and development | $ | 632 | $ | 1,961 | ||||
General and administrative | 2,021 | 2,461 | ||||||
Share-based compensation expense included in operating expenses | $ | 2,653 | $ | 4,422 | ||||
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December 31, | ||||||||
2009 | 2008 | |||||||
Risk-free interest rate | 0.6 | % | 3.2 | % | ||||
Dividend yield | 0.0 | % | 0.0 | % | ||||
Volatility | 295.0 | % | 115.1 | % | ||||
Expected life (years) | 5.6 | 5.6 |
December 31, | ||||
2008 | ||||
Risk-free interest rate | 1.1 | % | ||
Dividend yield | 0.0 | % | ||
Volatility | 99.6 | % | ||
Expected life | 3 months |
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Gross | Gross | |||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Realized | Realized | Estimated Fair | |||||||||||||||||||
Cost | Gains | Losses | Gains | Losses | Value | |||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Money market accounts | $ | 2,686 | $ | — | $ | — | $ | — | $ | — | $ | 2,686 | ||||||||||||
Asset-backed auction rate securities | 10,000 | — | — | — | (2,270 | ) | 7,730 | |||||||||||||||||
Auction rate security rights | — | — | — | 2,270 | — | 2,270 | ||||||||||||||||||
$ | 12,686 | $ | — | $ | — | $ | 2,270 | $ | (2,270 | ) | $ | 12,686 | ||||||||||||
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• | Level 1 — Quoted prices in active markets for identical assets or liabilities. | ||
• | Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
• | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
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F-14
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F-15
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Outstanding Options | ||||||||
Weighted- | ||||||||
Number of | Average | |||||||
Shares | Exercise Price | |||||||
Balance at December 31, 2007 | 4,809,576 | $ | 8.56 | |||||
Granted | 1,481,900 | $ | 2.02 | |||||
Exercised | (1,097 | ) | $ | 2.51 | ||||
Forfeited / Expired | (663,418 | ) | $ | 8.91 | ||||
Balance at December 31, 2008 | 5,626,961 | $ | 6.80 | |||||
Granted | 691,875 | $ | 1.73 | |||||
Forfeited / Expired | (2,810,268 | ) | $ | 5.31 | ||||
Balance at December 31, 2009 | 3,508,568 | $ | 6.99 | |||||
Years Ended December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Options | Price | Options | Price | |||||||||||||
Exercisable at end of year | 3,175,233 | $ | 7.47 | 3,522,747 | $ | 9.08 | ||||||||||
Weighted-average fair value of options granted during the year | $ | 1.72 | $ | 1.70 |
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Weighted- | Weighted- | |||||||||||||||||||
Average | Average | |||||||||||||||||||
Remaining | Weighted- | Exercise | ||||||||||||||||||
Contractual | Average | Price of | ||||||||||||||||||
Options | Range of | Life | Exercise | Options | Options | |||||||||||||||
Outstanding | Exercise Prices | (in years) | Price | Exercisable | Exercisable | |||||||||||||||
560,000 | $0.64 – $1.82 | 8.71 | $ | 1.61 | 425,104 | $ | 1.67 | |||||||||||||
539,498 | $1.87 – $3.08 | 7.40 | $ | 2.60 | 374,393 | $ | 2.62 | |||||||||||||
422,000 | $3.23 – $3.99 | 6.52 | $ | 3.67 | 422,000 | $ | 3.67 | |||||||||||||
475,105 | $4.20 – $4.46 | 6.10 | $ | 4.36 | 475,105 | $ | 4.36 | |||||||||||||
810,000 | $5.26 | 6.20 | $ | 5.26 | 776,666 | $ | 5.26 | |||||||||||||
356,094 | $5.47 – $18.75 | 4.67 | $ | 11.11 | 356,094 | $ | 11.11 | |||||||||||||
262,872 | $19.00 – $35.25 | 2.24 | $ | 27.56 | 262,872 | $ | 27.56 | |||||||||||||
15,999 | $35.50 | 1.95 | $ | 35.50 | 15,999 | $ | 35.50 | |||||||||||||
8,000 | $36.75 | 1.13 | $ | 36.75 | 8,000 | $ | 36.75 | |||||||||||||
58,999 | $38.25 | 1.55 | $ | 38.25 | 58,999 | $ | 38.25 | |||||||||||||
3,508,567 | $0.64 – $38.25 | 6.25 | $ | 6.99 | 3,175,232 | $ | 7.47 | |||||||||||||
Weighted- | ||||||||
Average | ||||||||
Grant Date | ||||||||
Fair Value | ||||||||
Shares | per Share | |||||||
Restricted stock units outstanding at December 31, 2008 | — | $ | — | |||||
Granted | 2,021,024 | $ | 0.17 | |||||
Restricted stock units outstanding at December 31, 2009 | 2,021,024 | $ | 0.17 |
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Year Ended | ||||
December 31, | ||||
2008 | ||||
Weighted-average fair value of Employee Stock Purchase Plan purchases | $ | 0.71 |
Amount | ||||
Unrecognized tax benefits balance at December 31, 2008 | $ | — | ||
Increases related to current and prior year tax positions | 45 | |||
Settlements and lapses in statutes of limitations | — | |||
Unrecognized tax benefits balance at December 31, 2009 | $ | 45 | ||
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December 31, | ||||||||
2009 | 2008 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | — | $ | — | ||||
Research and development credits | — | — | ||||||
Capitalized research and development and other | 12,881 | 14,330 | ||||||
Total deferred tax assets | 12,881 | 14,330 | ||||||
Net deferred tax assets | 12,881 | 14,330 | ||||||
Valuation allowance for deferred tax assets | (12,881 | ) | (14,330 | ) | ||||
Net deferred taxes | $ | — | $ | — | ||||
2009 | 2008 | |||||||
Tax benefit at statutory federal rate | $ | (3,022 | ) | $ | (21,999 | ) | ||
State tax benefit, net of federal | (496 | ) | (3,612 | ) | ||||
Generation of research and development credits | (347 | ) | (1,461 | ) | ||||
Expired tax attributes | 4,347 | 3,069 | ||||||
Removal of net operating losses and research and development credits | 767 | 19,696 | ||||||
Stock compensation expense | 281 | 733 | ||||||
Other | (81 | ) | 166 | |||||
Change in valuation allowance | (1,449 | ) | 3,408 | |||||
$ | — | $ | — | |||||
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F-20
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Quarters Ended | ||||||||||||||||
Mar. 31, | Jun. 30, | Sept. 30, | Dec. 31, | |||||||||||||
2009 | ||||||||||||||||
Revenue from collaborative agreement: | $ | 8,125 | $ | — | $ | — | $ | — | ||||||||
Expenses: | ||||||||||||||||
Research and development | 9,893 | (85 | ) | (240 | ) | 8 | ||||||||||
General and administrative | 2,487 | 2,124 | 992 | 1,590 | ||||||||||||
Total expenses | 12,380 | 2,039 | 752 | 1,598 | ||||||||||||
Loss from operations | (4,255 | ) | (2,039 | ) | (752 | ) | (1,598 | ) | ||||||||
Interest and other income (expense), net | 3 | (4 | ) | 54 | (43 | ) | ||||||||||
Net loss | $ | (4,252 | ) | $ | (2,043 | ) | $ | (698 | ) | $ | (1,641 | ) | ||||
Basic and diluted net loss per share | $ | (0.08 | ) | $ | (0.03 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
Shares used in computing basic and diluted net loss per share | 56,115 | 65,723 | 65,723 | 65,723 | ||||||||||||
2008 | ||||||||||||||||
Expenses: | ||||||||||||||||
Research and development | $ | 11,338 | $ | 12,732 | $ | 14,099 | $ | 12,856 | ||||||||
General and administrative | 1,906 | 2,069 | 2,791 | 2,936 | ||||||||||||
Asset impairment | 2,810 | |||||||||||||||
Loss from operations | (13,244 | ) | (14,801 | ) | (16,890 | ) | (18,602 | ) | ||||||||
Interest income (expense), net | (393 | ) | (134 | ) | (244 | ) | 1,454 | |||||||||
Net loss | $ | (13,637 | ) | $ | (14,935 | ) | $ | (17,134 | ) | $ | (17,148 | ) | ||||
Basic and diluted net loss per share | $ | (0.34 | ) | $ | (0.31 | ) | $ | (0.31 | ) | $ | (0.31 | ) | ||||
Shares used in computing basic and diluted net loss per share | 39,631 | 48,252 | 55,327 | 55,423 | ||||||||||||
F-21
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Exhibit Number | Description | |||
2.1 | Agreement and Plan of Reorganization, by and among La Jolla Pharmaceutical Company, Adamis Pharmaceuticals Corporation and Jewel Merger Sub, Inc., dated as of December 4, 2009 (16) | |||
3.1 | Restated Certificate of Incorporation (1) | |||
3.2 | Amended and Restated Bylaws (2) | |||
4.1 | Form of Common Stock Certificate (3) | |||
10.1 | Form of Indemnification Agreement (4)* | |||
10.2 | La Jolla Pharmaceutical Company 1994 Stock Incentive Plan (Amended and Restated as of May 16, 2003) (5)* | |||
10.3 | La Jolla Pharmaceutical Company 1995 Employee Stock Purchase Plan (Amended and Restated as of June 20, 2008) (6)* | |||
10.4 | La Jolla Pharmaceutical Company 2004 Equity Incentive Plan (Amended and Restated as of June 20, 2008) (6)* | |||
10.5 | Form of Option Grant under the La Jolla Pharmaceutical Company 2004 Equity Incentive Plan (6)* | |||
10.6 | Amended and Restated Employment Agreement, dated February 23, 2006, by and between the Company and Josefina Elchico (1)* | |||
10.7 | Amended and Restated Employment Agreement, dated February 23, 2006, by and between the Company and Gail Sloan (1)* | |||
10.8 | Chief Executive Officer Employment Agreement, dated March 15, 2006, by and between the Company and Deirdre Y. Gillespie, M.D. (7)* | |||
10.9 | Employment Offer Letter, dated July 10, 2006 and executed July 14, 2006, by and between the Company and Michael Tansey, M.D. (8)* | |||
10.10 | Employment Agreement, dated December 4, 2006, by and between the Company and Michael Tansey, M.D. (9)* | |||
10.11 | Executive Employment Agreement, dated May 10, 2007, by and between the Company and Niv Caviar (10)* | |||
10.12 | First Amendment to Chief Executive Officer Employment Agreement, dated July 31, 2007, by and between the Company and Deirdre Y. Gillespie (11)* | |||
10.13 | Employment Offer Letter, dated March 4, 2008, by and between the Company and Luke Seikkula (12)* | |||
10.14 | Underwriting Agreement, dated as of May 6, 2008, between the Company and UBS Securities, LLC and Canaccord Adams, Inc. (13) | |||
10.15 | Form of Warrant Agreement (13) |
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Exhibit Number | Description | |||
10.16 | Employment Offer Letter, dated March 4, 2008, by and between the Company and Lisa Koch-Hulle (14)* | |||
10.17 | First Amendment to Executive Employment Agreement, dated December 24, 2008, by and between the Company and Gail Sloan.(14)* | |||
10.18 | First Amendment to Executive Officer Employment Agreement, dated December 24, 2008, by and between the Company and Niv Caviar.(14)* | |||
10.19 | First Amendment to Employment Offer Letter, dated December 26, 2008, by and between the Company and Vicki Motte.(14)* | |||
10.20 | First Amendment to Employment Offer Letter, dated December 26, 2008, by and between the Company and Luke Seikkula.(14)* | |||
10.21 | First Amendment to Executive Employment Agreement, dated December 29, 2008, by and between the Company and Josefina Elchico.(14)* | |||
10.22 | First Amendment to Employment Offer Letter, dated December 29, 2008, by and between the Company and Lisa Koch-Hulle.(14)* | |||
10.23 | First Amendment to Executive Employment Agreement, dated December 30, 2008, by and between the Company and Michael Tansey.(14)* | |||
10.24 | Second Amendment to Chief Executive Officer Employment Agreement, dated December 31, 2008, by and between the Company and Deirdre Gillespie.(14)* | |||
10.25 | Development and Commercialization Agreement, dated as of January 4, 2009, by and between the Company and BioMarin CF Limited (15)† | |||
10.26 | Securities Purchase Agreement, dated as of January 4, 2009, by and between the Company and BioMarin Pharmaceutical Inc.(15)† | |||
10.27 | Amendment No. 1 to Development and Commercialization Agreement, dated as of January 4, 2009, by and between the Company and BioMarin CF Limited (15) | |||
10.28 | Amendment No. 1 to Securities Purchase Agreement, dated as of January 4, 2009, by and between the Company and BioMarin Pharmaceutical Inc.(15) | |||
10.29 | Retention and Separation Agreement and General Release of All Claims, dated December 4, 2009, by and between the Company and Deirdre Y. Gillespie, M.D. (16)* | |||
10.30 | Retention and Separation Agreement and General Release of All Claims, dated December 4, 2009, by and between the Company and Gail A. Sloan (16)* | |||
10.31 | Form of Voting Agreement (16) | |||
21.1 | Subsidiaries of La Jolla Pharmaceutical Company ** | |||
23.1 | Consent of Independent Registered Public Accounting Firm ** | |||
31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ** | |||
31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ** | |||
32.1 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ** |
* | This exhibit is a management contract or compensatory plan or arrangement. |
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Table of Contents
** | Filed herewith. | |
† | Confidential treatment for certain provisions of this exhibit. | |
(1) | Previously filed with the Company’s Current Report on Form 8-K filed March 1, 2006 and incorporated by reference herein. | |
(2) | Previously filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 and incorporated by reference herein. | |
(3) | Previously filed with the Company’s Registration Statement on Form S-3 (Registration No. 333-131246) filed January 24, 2006 and incorporated by reference herein. | |
(4) | Previously filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 and incorporated by reference herein. | |
(5) | Previously filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 and incorporated by reference herein. | |
(6) | Previously filed with the Company’s Registration Statement on Form S-8 (Registration No. 333-151825) filed June 20, 2008 and incorporated by reference herein. | |
(7) | Previously filed with the Company’s Current Report on Form 8-K filed March 20, 2006 and incorporated by reference herein. | |
(8) | Previously filed with the Company’s Current Report on Form 8-K filed July 18, 2006 and incorporated by reference herein. | |
(9) | Previously filed with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and incorporated by reference herein. | |
(10) | Previously filed with the Company’s Current Report on Form 8-K filed May 10, 2007 and incorporated by reference herein. | |
(11) | Previously filed with the Company’s Registration Statement on Form S-1 (Registration No. 33-76480) filed June 3, 1994 and incorporated by reference herein. | |
(12) | Previously filed with the Company’s Current Report on Form 8-K filed March 4, 2008 and incorporated by reference herein. | |
(13) | Previously filed with the Company’s Current Report on Form 8-K filed May 7, 2008 and incorporated by reference herein. | |
(14) | Previously filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated by reference herein. | |
(15) | Previously file with the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and incorporated by reference herein. | |
(16) | Previously filed with the Company’s Current Report on Form 8-K filed on December 7, 2009 and incorporated by reference herein. |
F-23