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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended DECEMBER 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-24274
 LA JOLLA PHARMACEUTICAL COMPANY
  Delaware
(State or other jurisdiction 
of incorporation or organization)
    
    33-0361285
(I.R.S. Employer
Identification Number)
 6455 Nancy Ridge Drive, San Diego, CA 92121
 (858) 452-6600
 None
  Title of each class:
    
    Name of each exchange on which registered:Common Stock, par value $0.01 per share
    
    The Nasdaq Global Market
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE




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TABLE
OF CONTENTS
 PART IItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    14Item 1B. Unresolved Staff Comments
    
    
    26Item 2. Properties
    
    
    26Item 3. Legal Proceedings
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    27Item 6. Selected Financial Data
    
    
    29Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    38Item 8. Financial Statements and Supplementary Data
    
    
    38Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    38Item 9A. Controls and Procedures
    
    
    39Item 9B. Other Information
    
    
    41PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    41Item 11. Executive Compensation
    
    
    41Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    41Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    41Item 14. Principal Accountant Fees and Services
    
    
    41PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    42Signatures
    
    
    43EXHIBIT 10.71EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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®




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PART I
  
 Item 1. Business
 Overview
 ®
 Recent Developments
  Developments in 2007
  
   1




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Business Strategy
  Seek additional funding, including through collaborative arrangements and through public and/or
private financings, to develop and commercialize product candidates.
 Complete clinical studies of Riquent to satisfy regulatory requirements.
 Continue commercialization planning activities.
 Develop additional therapeutics for other life-threatening diseases.
  2




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Riquent Program
    ® ®
 3




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Riquent Clinical Trial History
 Phase 1 trial
  Phase 2 trials
      Phase 2/3 trial
  4




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>
 Previous Phase 3 trial
    
 5




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Current Phase 3 ASPEN trial
     6




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7




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Riquent Regulatory Status
 Orphan drug designation for Riquent
   FDA fast track designation for Riquent
  Inflammatory and Autoimmune Programs
 SSAO Inflammation Program
   8




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Collaborative Arrangements
   Manufacturing
   9




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Marketing and Sales
    Patents and Proprietary Technologies
  
    
    Lupus Toleragens  seven issued United States patents, three issued Australian patents,
one granted Portuguese patent, two granted Norwegian patents, one granted European patent
(which has been unbundled as 13 European national patents), a second granted European
patent (which has been unbundled as 15 European national
patents), two granted Chinese patents, one granted
Hong Kong patent, one granted South Korean patent, two granted Canadian patents, two granted
Finnish patents, one granted Irish patent, and one granted Japanese patent (expiring
between 2010 and 2020); and
 10




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
    
    Tolerance Technology  five issued United States patents, one issued Australian patent,
one granted European patent (which has been unbundled as 15 European national patents), one
granted Japanese patent, two granted Canadian patents, one granted South Korean patent and
one granted Irish patent (expiring between 2011 and 2012).
 Competition
    Government Regulation
 United States
  11




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12




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Foreign
     Employees
  Available Information
  13




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Item 1A. Risk Factors
 I. RISK FACTORS RELATING TO LA JOLLA PHARMACEUTICAL COMPANY AND THE INDUSTRY IN WHICH WE OPERATE.
 We do not have sufficient financial resources to complete the current Phase 3 ASPEN study of
Riquent and may not have sufficient resources to continue to operate
unless we are able to raise sufficient additional capital.
  We may need to sell stock or assets, enter into collaborative agreements, significantly reduce our
operations, or merge with another entity to continue operations.
  Negative conditions in the global credit markets may impair the liquidity of a portion of our
investment portfolio.
   14




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Our
independent registered public accounting firm has issued an unqualified opinion with an explanatory paragraph, to the
effect that there is substantial doubt about our ability to continue as a going concern.
    In order to complete our current Phase 3 ASPEN study, we will need to accrue a sufficient number of
renal flares by enrolling a sufficient number of patients who meet the trial criteria. If we are
unable to successfully complete the trial, our business will be adversely affected and it may be
difficult or impossible for us to continue to operate.
  Results from our clinical trials may not be sufficient to obtain regulatory approvals to market
Riquent or our other drug candidates in the United States or other countries on a timely basis, if
at all.
   15




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We are currently devoting nearly all of our resources to the development and approval of Riquent.
Accordingly, our efforts with respect to other drug candidates have significantly diminished.
  Current and future clinical trials may be delayed or halted.
  
    
    we do not have sufficient financial resources;
 
    
    supplies of drug product are not sufficient to treat the patients in the studies;
 
    
    patients do not enroll in the studies at the rate we expect;
 
    
    the products are not effective;
 
    
    patients experience negative side effects or other safety concerns are raised during
treatment;
 
    
    the trials are not conducted in accordance with applicable clinical practices; or
 
    
    there is political unrest at foreign clinical sites; or
 
    
    there are natural disasters at any of our clinical sites.
  We may be required to design and conduct additional trials for Riquent.
  16




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We may experience shortages of Riquent for use in our clinical studies.
  If we encounter delays or difficulties in establishing or maintaining relationships with
manufacturing or distribution contractors, our ability to timely complete necessary clinical trials
and potentially deliver commercial products may be negatively affected.
  Our limited manufacturing capabilities and experience could result in shortages of drugs for future
sale, and our revenues and profit margin could be negatively affected.
  Our suppliers may not be able to provide us with sufficient quantities of materials that we need to
manufacture our products.
  
    
    our suppliers may not be able to increase their own manufacturing capabilities in order
to provide us with a sufficient amount of material for our use;
 17




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
    
    some of our suppliers may be required to pass FDA inspections or validations or to
obtain other regulatory approvals of their manufacturing facilities or processes, and they
may be delayed or unable to do so;
    
    the materials that our suppliers use to manufacture the chemicals and reagents that
they provide us may be costly or in short supply; and
    
    there are a limited number of suppliers that are able to provide us with the chemicals
or reagents that we use to manufacture our drugs.
  An interruption in the operation of our sole manufacturing facility could disrupt our operations.
  Retaining our current personnel and recruiting additional personnel will be critical to our
success.
  We will need additional funds to support our operations.
  
    
    the scope and results of our clinical trials;
 18




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
    
    our ability to manufacture sufficient quantities of drug to support clinical trials;
    
    our ability to obtain regulatory approval for Riquent;
    
    the time and costs involved in applying for regulatory approvals;
    
    continued scientific progress in our development programs;
    
    the size and complexity of our development programs;
    
    the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent
claims;
    
    competing technological and market developments;
    
    our ability to establish and maintain collaborative research and development
arrangements;
    
    our need to establish commercial manufacturing capabilities; and
    
    our ability to develop effective marketing and sales programs.
  Our freedom to operate our business or profit fully from sales of our products may be limited if we
enter into collaborative agreements.
   Any regulatory approvals that we may obtain for our product candidates may be limited and
subsequent issues regarding safety or efficacy could cause us to remove products from the market.
  19




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Even if we receive regulatory approval for our product candidates, we will be subject to ongoing
regulatory obligations and review, including validation of our manufacturing facilities and
processes.
   The size of the market for our potential products is uncertain.
  Our drugs may not achieve market acceptance.
  We lack experience in marketing products for commercial sale.
  20




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We may not earn as much revenue as we hope due to possible changes in healthcare reimbursement
policies.
  We have a history of losses and may not become profitable.
  Our success in developing and marketing our drug candidates depends significantly on our ability to
obtain patent protection for Riquent and any other developed products. In addition, we will need to
successfully preserve our trade secrets and operate without infringing on the rights of others.
  21




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
    
    others, including competitors, will develop inventions relevant to our business;
    
    our confidentiality agreements will be breached, and we may not have, or be successful
in obtaining, adequate remedies for such a breach; or
    
    our trade secrets will otherwise become known or be independently discovered by
competitors.
  The technology underlying our products is uncertain and unproven.
  22




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Because a number of companies compete with us, many of which have greater resources than we do, and
because we face rapid changes in technology in our industry, we cannot be certain that our products
will be accepted in the marketplace or capture market share.
  We may not be able to take advantage of the orphan drug designation for Riquent.
  The use of Riquent or other potential products in clinical trials, as well as the sale of any
approved products, may expose us to lawsuits resulting from the use of these products.
  We face environmental liabilities related to certain hazardous materials used in our operations.
  23




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II. RISK FACTORS RELATED SPECIFICALLY TO OUR STOCK.
 The ownership of our common stock is concentrated.
  Our common stock price is volatile and may decline even if our business is doing well.
  
    
    limited financial resources;
    
    our clinical trial results;
    
    future sales of significant amounts of our common stock by us or our stockholders;
    
    actions or decisions by the FDA and other comparable agencies;
    
    announcements of technological innovations or new therapeutic products by us or
others;
    
    developments in patent or other proprietary rights;
    
    public concern as to the safety of drugs discovered or developed by us or others;
    
    developments concerning potential agreements with collaborators;
    
    comments by securities analysts and general market conditions; and
    
    government regulation, including any legislation that may impact the price of any
commercial products that we may seek to sell.
  24




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Future sales of our stock by our stockholders could negatively affect the market price of our
stock.
  
    
    Approximately 39,619,996 shares of common stock that have been issued in registered
offerings or were otherwise freely tradable in the public markets.
    
    Approximately 10,761 shares of common stock eligible for resale in the public market
pursuant to SEC Rule 144.
    
    4,399,992 shares of common stock underlying warrants which have been registered for
resale under a Registration Statement on Form S-3.
    
    5,417,904 shares of common stock that may be issued on the exercise of outstanding
stock options granted under our various stock option plans at a weighted average exercise
price of $7.83 per share.
    
    Approximately 417,949 shares of common stock reserved for future issuance pursuant to
awards granted under our equity incentive and employee stock purchase plans, which shares
are covered by effective registration statements under the Securities Act of 1933, as
amended (the Securities Act).
    
    Pursuant to a registration statement on Form S-3 filed on December 10, 2002, we
registered an aggregate amount of $125,000,000 of our common stock for issuance from time
to time. As of February 29, 2008, there was $13,917,500 of our common stock available for
future issuance under this registration statement, which expires on December 1, 2008.
    
    Pursuant to a registration statement on Form S-3 filed on August 20, 2007, we
registered an aggregate amount of $77,000,000 of our common stock for issuance from time to
time. As of February 29, 2008, no shares of common stock had been issued under this
registration statement, which expires on August 23, 2010.
  Our stock may be removed from listing on the Nasdaq Global Market and may not qualify for listing
on any stock exchange, in which case it may be difficult to maintain a market in our stock.
  25




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Failure to achieve and maintain effective internal control over financial reporting in accordance
with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and
stock price.
  Anti-takeover devices may prevent changes in our board of directors and management.
   
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
  
 Item 3. Legal Proceedings.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  26




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PART II
 
 Item 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
 Information About Our Common Stock
  PricesHigh
    
    LowYear Ended December 31, 2007First Quarter
    
    $
    8.57
    
    
    $
    2.80Second Quarter
    
    
    8.68
    
    
    
    4.35Third Quarter
    
    
    5.59
    
    
    
    3.15Fourth Quarter
    
    
    4.50
    
    
    
    3.15Year Ended December 31, 2006First Quarter
    
    $
    5.65
    
    
    $
    3.28Second Quarter
    
    
    4.95
    
    
    
    3.47Third Quarter
    
    
    4.10
    
    
    
    3.50Fourth Quarter
    
    
    3.79
    
    
    
    2.77
  Information About Our Equity Compensation Plans
 
 27




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Stock Performance Graph
  
 12/31/2002
    
    
    12/31/2003
    
    
    12/31/2004
    
    
    12/31/2005
    
    
    12/31/2006
    
    
    12/31/2007La Jolla Pharmaceutical
Company*
    
    
    $
    100
    
    
    
    $
    65.54
    
    
    
    $
    25.69
    
    
    
    $
    11.38
    
    
    
    $
    9.32
    
    
    
    $
    12.06Nasdaq  US
    
    
    $
    100
    
    
    
    $
    149.52
    
    
    
    $
    162.72
    
    
    
    $
    166.18
    
    
    
    $
    182.57
    
    
    
    $
    197.98Nasdaq  Pharmaceuticals
    
    
    $
    100
    
    
    
    $
    146.59
    
    
    
    $
    156.13
    
    
    
    $
    171.93
    
    
    
    $
    168.29
    
    
    
    $
    176.97
 
 *
    
    La Jolla Pharmaceutical Company stock prices have been adjusted to reflect the one-for-five
reverse stock split effective December 21, 2005. 28




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Item 6. Selected Financial Data.
  Years Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands, except per share amounts)Consolidated Statements of
Operations Data:Expenses:Research and development
    
    $
    46,635
    
    
    $
    32,938
    
    
    $
    22,598
    
    
    $
    33,169
    
    
    $
    32,385General and administrative
    
    
    9,058
    
    
    
    9,287
    
    
    
    5,405
    
    
    
    7,568
    
    
    
    6,908Loss from operations
    
    
    (55,693
    )
    
    
    (42,225
    )
    
    
    (28,003
    )
    
    
    (40,737
    )
    
    
    (39,293
    )Interest expense
    
    
    (82
    )
    
    
    (46
    )
    
    
    (116
    )
    
    
    (190
    )
    
    
    (210
    )Interest income
    
    
    2,699
    
    
    
    2,826
    
    
    
    756
    
    
    
    383
    
    
    
    665Net loss
    
    $
    (53,076
    )
    
    $
    (39,445
    )
    
    $
    (27,363
    )
    
    $
    (40,544
    )
    
    $
    (38,838
    )Basic and diluted net loss per share
    
    $
    (1.40
    )
    
    $
    (1.21
    )
    
    $
    (1.77
    )
    
    $
    (3.40
    )
    
    $
    (4.24
    )Shares used in computing basic and
diluted net loss per share (1)
    
    
    37,818
    
    
    
    32,588
    
    
    
    15,446
    
    
    
    11,941
    
    
    
    9,161Balance Sheet Data:Working capital
    
    $
    29,881
    
    
    $
    37,673
    
    
    $
    70,124
    
    
    $
    17,539
    
    
    $
    28,914Total assets
    
    $
    44,405
    
    
    $
    49,525
    
    
    $
    80,928
    
    
    $
    33,026
    
    
    $
    41,944Noncurrent portion of obligations
under capital leases and notes
payable
    
    $
    388
    
    
    $
    196
    
    
    $
    142
    
    
    $
    716
    
    
    $
    1,341Stockholders equity
    
    $
    33,521
    
    
    $
    43,089
    
    
    $
    77,130
    
    
    $
    26,001
    
    
    $
    36,427
 
 (1)
    
    Shares have been adjusted to reflect the one-for-five reverse stock split effective December
21, 2005. 29




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Introduction
  
    
    Recent developments. This section provides a general description of recent events and
significant transactions that we believe are important in understanding our financial
condition and results of operations.
    
    Overview. This section provides a general description of our business and operating
history.
    
    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, 2007 to the results for the year ended December 31,
2006 and comparing the results for the year ended December 31, 2006 to the results for the
year ended December 31, 2005.
    
    Liquidity and capital resources. This section provides an analysis of our cash flows
and a discussion of our outstanding debt and commitments, both firm and contingent, that
existed as of December 31, 2007. Included in the discussion of outstanding debt is a
discussion of our financial capacity to fund our future commitments and a discussion of
other financing arrangements.
 Recent Developments
 2008
  2007
  
 30




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Overview
   31




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Critical Accounting Policies and Estimates
   Impairment and useful lives of long-lived assets
   32




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Accrued clinical/regulatory expenses
  Share-Based Compensation
 Share-Based Payments
 Accounting and Disclosure of Stock-Based Compensation
  New Accounting Pronouncements
 Fair
Value Measurements
 33




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Accounting for Uncertainty
in Income Taxes Accounting for
Income Taxes
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Accounting for Nonrefundable Advance Payments for Goods or Services to Be
Used in Future Research and Development Activities
 Results of Operations
 Years Ended December 31, 2007, 2006 and 2005
 Research and Development Expense
   34




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General and Administrative Expense
   Interest Income and Expense
 Net
Operating Loss and Research Tax Credit Carryforwards
 35




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Liquidity and Capital Resources
    36




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Payment due by period (in thousands)Less than
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    1 Year
    
    1-3 Years
    
    3-5 Years
    
    5 YearsLong-term debt obligations
    
    $
    568
    
    
    $
    179
    
    
    $
    389
    
    
    $
    
    
    
    $
    Operating lease obligations
    
    
    1,424
    
    
    
    830
    
    
    
    594
    
    
    
    
    
    
    
    Capital lease obligations
    
    
    69
    
    
    
    15
    
    
    
    42
    
    
    
    12
    
    
    
    Purchase obligations
    
    
    1,412
    
    
    
    1,412
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    3,473
    
    
    $
    2,436
    
    
    $
    1,025
    
    
    $
    12
    
    
    $
    
    Off-Balance Sheet Arrangements
  37




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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
       
 Item 8. Financial Statements and Supplementary Data.
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  38




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Item 9A. Controls and Procedures.
 (a) Disclosure Controls and Procedures; Changes in Internal Control Over Financial
Reporting
   (b) Management Report on Internal Control Over Financial Reporting
  
    
    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.
     39




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(c) Report Of Independent Registered Public Accounting Firm
 
        
 40




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Item 9B. Other Information.
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
   
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accountant Fees and Services.
  41




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PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
  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:
 Report of Independent Registered Public Accounting Firm
    
    F-1Consolidated Balance Sheets at December 31, 2007 and 2006
    
    F-2Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005
    
    F-3Consolidated Statements of Stockholders Equity for the years ended December 31, 2007,
2006 and 2005
    
    F-4Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005
    
    F-5Notes to Consolidated Financial Statements
    
    F-6
     42




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SIGNATURES
  LA JOLLA PHARMACEUTICAL COMPANYBy:
    /s/ Deirdre Y. GillespieMarch 17, 2008
    
    Deirdre Y. Gillespie, M.D.President, Chief Executive Officer and

Assistant Secretary  Signature
    
    Title
    
    Date/s/ Deirdre Y. Gillespie

Deirdre Y. Gillespie, M.D.
    
    President, Chief Executive Officer and Assistant
Secretary (Principal Executive Officer)
    
    March 17, 2008/s/ Niv E. Caviar

Niv E. Caviar
    
    Executive Vice President, Chief Business
Officer and Chief Financial Officer (Principal
Financial Officer)
    
    March 17, 2008/s/ Gail A. Sloan

Gail A. Sloan
    
    Vice President of Finance and Secretary
(Principal Accounting Officer)
    
    March 17, 2008/s/ Thomas H. Adams
    
    Director
    
    March 17, 2008Thomas H. Adams, Ph.D./s/ Robert A. Fildes
    
    Director
    
    March 17, 2008Robert A. Fildes, Ph.D./s/ Stephen M. Martin
    
    Director
    
    March 17, 2008Stephen M. Martin/s/ Nader J. Naini
    
    Director
    
    March 17, 2008Nader J. Naini/s/ Craig R. Smith
    
    Director
    
    March 17, 2008Craig R. Smith, M.D./s/ Martin Sutter
    
    Director
    
    March 17, 2008Martin Sutter/s/ James N. Topper
    
    Director
    
    March 17, 2008James N. Topper, M.D., Ph.D./s/ Frank E. Young
    
    Director
    
    March 17, 2008Frank E. Young, M.D., Ph.D.
 43




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##### Table of Contents



F-1




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December 31,2007
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    4,373
    
    
    $
    3,829Short-term investments, available-for-sale
    
    
    34,986
    
    
    
    39,080Prepaids and other current assets
    
    
    1,018
    
    
    
    1,004Total current assets
    
    
    40,377
    
    
    
    43,913Property and equipment, net
    
    
    1,271
    
    
    
    2,333Patent costs and other assets, net
    
    
    2,757
    
    
    
    3,279$
    44,405
    
    
    $
    49,525Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    2,203
    
    
    $
    2,125Accrued clinical/regulatory expenses
    
    
    6,282
    
    
    
    1,530Accrued expenses
    
    
    664
    
    
    
    1,137Accrued payroll and related expenses
    
    
    1,199
    
    
    
    1,265Current portion of obligations under notes payable
    
    
    138
    
    
    
    183Current portion of obligations under capital leases
    
    
    10
    
    
    
    Total current liabilities
    
    
    10,496
    
    
    
    6,240Non-current portion of obligations under notes payable
    
    
    344
    
    
    
    196Non-current portion of obligations under capital leases
    
    
    44
    
    
    
    CommitmentsStockholders 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, 39,629,660 and 32,692,676 shares issued
and outstanding at December 31, 2007 and 2006,
respectively
    
    
    396
    
    
    
    327Additional paid-in capital
    
    
    385,944
    
    
    
    342,519Other comprehensive income
    
    
    14
    
    
    
    Accumulated deficit
    
    
    (352,833
    )
    
    
    (299,757
    )Total stockholders equity
    
    
    33,521
    
    
    
    43,089$
    44,405
    
    
    $
    49,525
 See accompanying notes.
 F-2




---



##### Table of Contents



Years Ended December 31,2007
    
    2006
    
    2005Expenses:Research and development
    
    $
    46,635
    
    
    $
    32,938
    
    
    $
    22,598General and administrative
    
    
    9,058
    
    
    
    9,287
    
    
    
    5,405Total expenses
    
    
    55,693
    
    
    
    42,225
    
    
    
    28,003Loss from operations
    
    
    (55,693
    )
    
    
    (42,225
    )
    
    
    (28,003
    )Interest expense
    
    
    (82
    )
    
    
    (46
    )
    
    
    (116
    )Interest income
    
    
    2,699
    
    
    
    2,826
    
    
    
    756Net loss
    
    $
    (53,076
    )
    
    $
    (39,445
    )
    
    $
    (27,363
    )Basic and diluted net loss per share
    
    $
    (1.40
    )
    
    $
    (1.21
    )
    
    $
    (1.77
    )Shares used in computing basic and diluted net loss per share
    
    
    37,818
    
    
    
    32,588
    
    
    
    15,446
 See accompanying notes.
 F-3




---



##### Table of Contents



Additional
    
    Other
    
    
    
    
    
    TotalCommon stock
    
    paid-in
    
    comprehensive
    
    Accumulated
    
    stockholdersShares
    
    Amount
    
    capital
    
    income (loss)
    
    deficit
    
    equityBalance at December 31, 2004
    
    
    12,302
    
    
    $
    123
    
    
    $
    258,850
    
    
    $
    (23
    )
    
    $
    (232,949
    )
    
    $
    26,001Issuance of common stock, net
    
    
    20,050
    
    
    
    200
    
    
    
    77,955
    
    
    
    
    
    
    
    
    
    
    
    78,155Issuance of common stock
under Employee Stock
Purchase Plan
    
    
    95
    
    
    
    1
    
    
    
    287
    
    
    
    
    
    
    
    
    
    
    
    288Exercise of stock options
    
    
    3
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Share-based compensation
expense
    
    
    83
    
    
    
    1
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    20Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,363
    )
    
    
    (27,363
    )Net unrealized gains on
available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    23Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,340
    )Balance at December 31, 2005
    
    
    32,533
    
    
    
    325
    
    
    
    337,117
    
    
    
    
    
    
    
    (260,312
    )
    
    
    77,130Issuance of common stock
under Employee Stock
Purchase Plan
    
    
    80
    
    
    
    1
    
    
    
    226
    
    
    
    
    
    
    
    
    
    
    
    227Exercise of stock options
    
    
    56
    
    
    
    1
    
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    126Share-based compensation
expense
    
    
    24
    
    
    
    
    
    
    
    5,051
    
    
    
    
    
    
    
    
    
    
    
    5,051Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,445
    )
    
    
    (39,445
    )Balance at December 31, 2006
    
    
    32,693
    
    
    
    327
    
    
    
    342,519
    
    
    
    
    
    
    
    (299,757
    )
    
    
    43,089Issuance of common stock, net
    
    
    6,670
    
    
    
    67
    
    
    
    37,845
    
    
    
    
    
    
    
    
    
    
    
    37,912Issuance of common stock
under Employee Stock
Purchase Plan
    
    
    97
    
    
    
    1
    
    
    
    260
    
    
    
    
    
    
    
    
    
    
    
    261Exercise of stock options
    
    
    166
    
    
    
    1
    
    
    
    499
    
    
    
    
    
    
    
    
    
    
    
    500Share-based compensation
expense
    
    
    4
    
    
    
    
    
    
    
    4,821
    
    
    
    
    
    
    
    
    
    
    
    4,821Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,076
    )
    
    
    (53,076
    )Net unrealized gains on
available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,062
    )Balance at December 31, 2007
    
    
    39,630
    
    
    $
    396
    
    
    $
    385,944
    
    
    $
    14
    
    
    $
    (352,833
    )
    
    $
    33,521
 See accompanying notes.
 F-4




---



##### Table of Contents



Years Ended December 31,2007
    
    2006
    
    2005Operating activitiesNet loss
    
    $
    (53,076
    )
    
    $
    (39,445
    )
    
    $
    (27,363
    )Adjustments to reconcile net loss to net cash used for operating activities:Depreciation and amortization
    
    
    1,687
    
    
    
    1,987
    
    
    
    2,109Loss on write-off/disposal of patents, property and equipment and
licenses
    
    
    934
    
    
    
    420
    
    
    
    405Share-based compensation expense
    
    
    4,821
    
    
    
    5,051
    
    
    
    20Accretion of interest income, net
    
    
    (227
    )
    
    
    36
    
    
    
    (125
    )Changes in operating assets and liabilities:Prepaids and other current assets
    
    
    (14
    )
    
    
    (101
    )
    
    
    (120
    )Accounts payable
    
    
    78
    
    
    
    1,259
    
    
    
    (589
    )Accrued clinical/regulatory expenses
    
    
    4,752
    
    
    
    1,303
    
    
    
    (420
    )Accrued expenses
    
    
    (473
    )
    
    
    (147
    )
    
    
    (777
    )Accrued payroll and related expenses
    
    
    (66
    )
    
    
    487
    
    
    
    (432
    )Net cash used for operating activities
    
    
    (41,584
    )
    
    
    (29,150
    )
    
    
    (27,292
    )Investing activitiesPurchases of short-term investments
    
    
    (51,415
    )
    
    
    (16,700
    )
    
    
    (82,350
    )Sales of short-term investments
    
    
    55,750
    
    
    
    44,050
    
    
    
    36,236Additions to property and equipment
    
    
    (354
    )
    
    
    (335
    )
    
    
    (123
    )Increase in patent costs and other assets
    
    
    (628
    )
    
    
    (536
    )
    
    
    (361
    )Net cash provided by (used for) investing activities
    
    
    3,353
    
    
    
    26,479
    
    
    
    (46,598
    )Financing activitiesNet proceeds from issuance of common stock
    
    
    38,673
    
    
    
    353
    
    
    
    78,449Proceeds from issuance of notes payable
    
    
    312
    
    
    
    263
    
    
    
    Payments on obligations under notes payable
    
    
    (209
    )
    
    
    (527
    )
    
    
    (995
    )Payments on obligations under capital leases
    
    
    (1
    )
    
    
    
    
    
    
    (14
    )Net cash provided by financing activities
    
    
    38,775
    
    
    
    89
    
    
    
    77,440Increase (decrease) in cash and cash equivalents
    
    
    544
    
    
    
    (2,582
    )
    
    
    3,550Cash and cash equivalents at beginning of period
    
    
    3,829
    
    
    
    6,411
    
    
    
    2,861Cash and cash equivalents at end of period
    
    $
    4,373
    
    
    $
    3,829
    
    
    $
    6,411Supplemental disclosure of cash flow information:Interest paid
    
    $
    82
    
    
    $
    46
    
    
    $
    116Supplemental schedule of noncash investing and financing activities:Capital lease obligations incurred for property and equipment
    
    $
    55
    
    
    $
    
    
    
    $
    
 See accompanying notes.
 F-5




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##### Table of Contents



1. Organization and Summary of Significant Accounting Policies
 Organization and Business Activity
  Basis of Presentation
   Principles of Consolidation
  Use of Estimates
  Cash, Cash Equivalents and Short-Term Investments
 Accounting for Certain Investments in Debt and Equity Securities
 F-6




---



##### Table of Contents



1. Organization and Summary of Significant Accounting Policies (continued)
 Fair Value of Financial Instruments
  Concentration of Risk
   Impairment of Long-Lived Assets and Assets to Be Disposed Of
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Property and Equipment
  F-7




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##### Table of Contents



1. Organization and Summary of Significant Accounting Policies (continued)
  December 31,2007
    
    2006Laboratory equipment
    
    $
    6,498
    
    
    $
    6,347Computer equipment and software
    
    
    4,727
    
    
    
    4,682Furniture and fixtures
    
    
    491
    
    
    
    488Leasehold improvements
    
    
    3,273
    
    
    
    3,26814,989
    
    
    
    14,785Less: Accumulated depreciation
    
    
    (13,718
    )
    
    
    (12,452
    )$
    1,271
    
    
    $
    2,333
  Patents
  Accrued Clinical/Regulatory Expenses
  Share-Based Compensation
 Share-Based Payment Accounting and Disclosure of Stock-Based Compensation Accounting for Stock Issued to Employees
 F-8




---



##### Table of Contents



1. Organization and Summary of Significant Accounting Policies (continued)
    Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services
  Year EndedDecember 31, 2005Net loss as reported
    
    $
    (27,363
    )Share-based compensation expense determined under fair value based method for all awards
    
    
    (3,843
    )Pro forma net loss
    
    $
    (31,206
    )Basic and diluted net loss per shareas reported
    
    $
    (1.77
    )Basic and diluted net loss per sharepro forma
    
    $
    (2.02
    )
   F-9




---



##### Table of Contents



1. Organization and Summary of Significant Accounting Policies (continued)
   Valuation and Expense Information Under SFAS 123R and APB 25
  December 31,2007
    
    
    2006Research and development
    
    $
    1,907
    
    
    $
    1,833General and administrative
    
    
    2,903
    
    
    
    3,215Share-based compensation expense included in operating expenses
    
    $
    4,810
    
    
    $
    5,048
  Options:
 December 31,2007
    
    2006
    
    2005Risk-free interest rate
    
    
    4.7
    %
    
    
    4.8
    %
    
    
    4.1
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Volatility
    
    
    118.0
    %
    
    
    113.7
    %
    
    
    119.0
    %Expected life (years)
    
    
    6.0
    
    
    
    5.9
    
    
    
    5.9
 F-10




---



##### Table of Contents



1. Organization and Summary of Significant Accounting Policies (continued)
 ESPP:
 December 31,2007
    
    2006
    
    2005Risk-free interest rate
    
    
    4.5
    %
    
    
    4.8
    %
    
    
    4.1
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Volatility
    
    
    67.8
    %
    
    
    46.4
    %
    
    
    125.4
    %Expected life (years)
    
    3 months
    
    3 months
    
    
    5.9
      Restricted Stock
  F-11




---



##### Table of Contents



1. Organization and Summary of Significant Accounting Policies (continued)
     Reverse Stock Split
  Net Loss Per Share
 Earnings per Share
  F-12




---



##### Table of Contents



1. Organization and Summary of Significant Accounting Policies (continued)
 Comprehensive Loss
 Reporting Comprehensive Income (Loss)
 Recently Issued Accounting Standards
 Fair
Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used
in Future Research and Development Activities
 F-13




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##### Table of Contents



2. Cash Equivalents and Short-term Investments
  Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Estimated FairCost
    
    Gains
    
    Losses
    
    ValueDecember 31, 2007Money market accounts
    
    $
    2,051
    
    
    $
    
    
    
    $
    
    
    
    $
    2,051Obligations of United States government agencies
    
    
    6,916
    
    
    
    14
    
    
    
    
    
    
    
    6,930Asset-backed
auction rate securities
    
    
    28,056
    
    
    
    
    
    
    
    
    
    
    
    28,056$
    37,023
    
    
    $
    14
    
    
    $
    
    
    
    $
    37,037
 Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Estimated FairCost
    
    Gains
    
    Losses
    
    ValueDecember 31, 2006Money market accounts
    
    $
    2,189
    
    
    $
    
    
    
    $
    
    
    
    $
    2,189United States corporate debt securities
    
    
    12,024
    
    
    
    
    
    
    
    
    
    
    
    12,024Asset-backed auction rate securities
    
    
    27,056
    
    
    
    
    
    
    
    
    
    
    
    27,056$
    41,269
    
    
    $
    
    
    
    $
    
    
    
    $
    41,269
  3. Commitments
 Leases
    F-14




---



##### Table of Contents



3. Commitments (continued)
    Operating
    
    
    CapitalYears ended December 31,
    
    Leases
    
    
    Leases2008
    
    $
    830
    
    
    $
    152009
    
    
    543
    
    
    
    142010
    
    
    34
    
    
    
    142011
    
    
    17
    
    
    
    142012 and there-after
    
    
    
    
    
    
    12Total
    
    $
    1,424
    
    
    $
    69Less amount representing interest
    
    
    
    
    
    
    (15
    )Present value of net minimum lease payments
    
    
    
    
    
    
    54Less current portion
    
    
    
    
    
    
    10Noncurrent portion of capital lease obligations
    
    
    
    
    
    $
    44
  Purchase Obligations
  4. Long-Term Debt
  OriginalNoteInterest
    
    
    
    
    AmountDate of Note
    
    Rate (%)
    
    
    Monthly Payments
    
    (in thousands)September 28, 2004
    
    
    8.44
    
    
    First 36 months at $5,000; last six months at $1,000
    
    
    157December 28, 2006
    
    
    10.56
    
    
    First 36 months at $8,000; last 12 months at $3,000
    
    
    263June 28, 2007
    
    
    10.82
    
    
    First 36 months at $2,000; last 12 months at $500
    
    
    75December 31, 2007
    
    
    10.55
    
    
    $6,000 for 48 months
    
    
    236$
    731
 F-15




---



##### Table of Contents



4. Long-Term Debt (continued)
  NotesYears ended December 31,
    
    Payable2008
    
    $
    1792009
    
    
    1932010
    
    
    1272011
    
    
    69Total
    
    
    568Less amount representing interest
    
    
    (86
    )Present value of net minimum notes payable payments
    
    
    482Less current portion
    
    
    (138
    )Noncurrent portion of notes payable
    
    $
    344
 5. Restructuring Charges
 Accounting for Costs Associated with Exit or Disposal
  6. Stockholders Equity
 Preferred Stock
   F-16




---



##### Table of Contents



6. Stockholders Equity (continued)
 Warrants
  Restricted Stock
     Stock Option Plans
  F-17




---



##### Table of Contents



6. Stockholders Equity (continued)
   Outstanding OptionsOptions
    
    
    
    
    
    Weighted-Available
    
    Number of
    
    AverageFor Grant
    
    Shares
    
    Exercise PriceBalance at December 31, 2004
    
    
    131,125
    
    
    
    1,795,502
    
    
    $
    22.22Additional shares authorized
    
    
    3,760,000
    
    
    
    
    
    
    
    Granted
    
    
    (743,981
    )
    
    
    743,981
    
    
    $
    3.35Restricted stock granted
    
    
    (83,518
    )
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    (3,106
    )
    
    $
    2.37Cancelled
    
    
    388,349
    
    
    
    (388,349
    )
    
    $
    20.15Expired
    
    
    (261,744
    )
    
    
    
    
    
    
    Balance at December 31, 2005
    
    
    3,190,231
    
    
    
    2,148,028
    
    
    $
    16.09Granted
    
    
    (2,450,745
    )
    
    
    2,450,745
    
    
    $
    4.58Restricted stock granted
    
    
    (23,600
    )
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    (56,012
    )
    
    $
    2.25Cancelled
    
    
    240,382
    
    
    
    (240,382
    )
    
    $
    14.04Expired
    
    
    (100,983
    )
    
    
    
    
    
    
    Balance at December 31, 2006
    
    
    855,285
    
    
    
    4,302,379
    
    
    $
    9.83Additional shares authorized
    
    
    840,000
    
    
    
    
    
    
    
    Granted
    
    
    (1,027,973
    )
    
    
    1,027,973
    
    
    $
    4.30Restricted stock granted
    
    
    (3,600
    )
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    (166,280
    )
    
    $
    3.01Cancelled
    
    
    354,496
    
    
    
    (354,496
    )
    
    $
    14.20Expired
    
    
    (153,808
    )
    
    
    
    
    
    
    Balance at December 31, 2007
    
    
    864,400
    
    
    
    4,809,576
    
    
    $
    8.56
   F-18




---



##### Table of Contents



6. Stockholders Equity (continued)
 Years Ended December 31,2007
    
    2006
    
    2005Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseOptions
    
    Price
    
    Options
    
    Price
    
    Options
    
    PriceExercisable at end of year
    
    
    2,808,588
    
    
    $
    11.44
    
    
    
    1,859,139
    
    
    $
    16.27
    
    
    
    1,276,090
    
    
    $
    22.24Weighted-average fair
value of options granted
during the year
    
    $
    3.71
    
    
    
    
    
    
    $
    3.92
    
    
    
    
    
    
    $
    2.81
  Weighted-
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    Weighted-
    
    
    
    
    
    ExerciseContractual
    
    Average
    
    
    
    
    
    Price ofOptions
    
    Range of
    
    Life
    
    Exercise
    
    Options
    
    OptionsOutstanding
    
    Exercise Prices
    
    (in years)
    
    Price
    
    Exercisable
    
    Exercisable645,050
    
    $
    1.72

$
    3.08
    
    
    7.82
    
    
    $
    2.80
    
    
    
    295,965
    
    
    $
    2.53512,078
    
    $
    3.23

$
    4.01
    
    
    8.63
    
    
    $
    3.70
    
    
    
    225,189
    
    
    $
    3.69339,787
    
    $
    4.03

$
    4.44
    
    
    7.65
    
    
    $
    4.21
    
    
    
    243,939
    
    
    $
    4.201,025,089
    
    $  4.46
    
    
    7.35
    
    
    $
    4.46
    
    
    
    624,297
    
    
    $
    4.46855,500
    
    $
    4.60

$
    5.26
    
    
    8.27
    
    
    $
    5.23
    
    
    
    378,834
    
    
    $
    5.26460,199
    
    $
    5.28

$
    14.00
    
    
    8.44
    
    
    $
    6.58
    
    
    
    68,491
    
    
    $
    11.58449,566
    
    $
    14.50

$
    23.13
    
    
    4.38
    
    
    $
    17.08
    
    
    
    449,566
    
    
    $
    17.08522,307
    
    $
    23.55

$
    60.31
    
    
    4.15
    
    
    $
    31.16
    
    
    
    522,307
    
    
    $
    31.164,809,576
    
    $
    1.72

$
    60.31
    
    
    7.21
    
    
    $
    8.56
    
    
    
    2,808,588
    
    
    $
    11.44
  Employee Stock Purchase Plan
  Years Ended December 31,2007
    
    2006
    
    2005Weighted-average fair value of Employee Stock Purchase Plan purchases
    
    $
    1.47
    
    
    $
    1.48
    
    
    $
    0.59
 F-19




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##### Table of Contents



6. Stockholders Equity (continued)
 Stockholder Rights Plan
  7. 401(k) Plan
  8. Income Taxes
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
   F-20




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##### Table of Contents



8. Income Taxes (continued)
    December 31,2007
    
    2006Deferred tax assets:Net operating loss carryforwards
    
    $
    
    
    
    $
    104,705Research and development credits
    
    
    
    
    
    
    19,100Capitalized
research and development and other
    
    
    10,923
    
    
    
    7,691Total deferred tax assets
    
    
    10,923
    
    
    
    131,496Net deferred tax assets
    
    
    10,923
    
    
    
    131,496Valuation allowance for deferred tax assets
    
    
    (10,923
    )
    
    
    (131,496
    )Net deferred taxes
    
    $
    
    
    
    $
    
 9. Subsequent Events
   F-21




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##### Table of Contents



10. Selected Quarterly Financial Data (unaudited)
  Quarters EndedMar. 31,
    
    Jun. 30,
    
    Sept. 30,
    
    Dec. 31,2007Expenses:Research and development
    
    $
    10,375
    
    
    $
    12,186
    
    
    $
    11,448
    
    
    $
    12,626General and administrative
    
    
    1,980
    
    
    
    2,112
    
    
    
    2,585
    
    
    
    2,381Loss from operations
    
    
    (12,355
    )
    
    
    (14,298
    )
    
    
    (14,033
    )
    
    
    (15,007
    )Interest income, net
    
    
    485
    
    
    
    781
    
    
    
    744
    
    
    
    607Net loss
    
    $
    (11,870
    )
    
    $
    (13,517
    )
    
    $
    (13,289
    )
    
    $
    (14,400
    )Basic and diluted net loss per share
    
    $
    (0.36
    )
    
    $
    (0.34
    )
    
    $
    (0.34
    )
    
    $
    (0.36
    )Shares used in computing basic and diluted net loss per share
    
    
    32,737
    
    
    
    39,256
    
    
    
    39,577
    
    
    
    39,6072006Expenses:Research and development
    
    $
    7,890
    
    
    $
    8,187
    
    
    $
    7,687
    
    
    $
    9,174General and administrative
    
    
    3,725
    
    
    
    1,900
    
    
    
    1,546
    
    
    
    2,116Loss from operations
    
    
    (11,615
    )
    
    
    (10,087
    )
    
    
    (9,233
    )
    
    
    (11,290
    )Interest income, net
    
    
    747
    
    
    
    742
    
    
    
    695
    
    
    
    596Net loss
    
    $
    (10,868
    )
    
    $
    (9,345
    )
    
    $
    (8,538
    )
    
    $
    (10,694
    )Basic and diluted net loss per share
    
    $
    (0.33
    )
    
    $
    (0.29
    )
    
    $
    (0.26
    )
    
    $
    (0.33
    )Shares used in computing basic and diluted net loss per share
    
    
    32,480
    
    
    
    32,503
    
    
    
    32,534
    
    
    
    32,660
 F-22




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##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description3.1
    
    Restated Certificate of Incorporation (1)3.2
    
    Amended and Restated Bylaws (2)3.3
    
    Form of Common Stock Certificate (3)4.1
    
    Rights Agreement, dated as of December 3, 1998, between the Company and American
Stock Transfer & Trust Company (4)4.2
    
    Amendment No. 1 to the Rights Agreement, dated as of July 21, 2000, between the
Company and American Stock Transfer & Trust Company (5)4.3
    
    Amendment No. 2 to the Rights Agreement, dated as of December 14, 2005, between the
Company and American Stock Transfer & Trust Company (6)4.4
    
    Amendment No. 3 to the Rights Agreement, dated as of March 1, 2006, between the
Company and American Stock Transfer & Trust Company (1)10.1
    
    Form of Indemnification Agreement (7)*10.2
    
    Industrial Real Estate Lease, effective July 27, 1992, by and between the Company
and BRE Properties, Inc. (8)10.3
    
    First Amendment to Lease, dated March 15, 1993, by and between the Company and BRE
Properties, Inc. (8)10.4
    
    Second Amendment to Lease, dated July 18, 1994, by and between the Company and BRE
Properties, Inc. (9)10.5
    
    Third Amendment to Lease, dated January 26, 1995, by and between the Company and
BRE Properties, Inc. (10)10.6
    
    Fourth Amendment to Lease, dated July 8, 2004, by and between the Company and
EOP-Industrial Portfolio, LLC (11)10.7
    
    Building Lease Agreement, effective November 1, 1996, by and between the Company
and WCB II-S BRD Limited Partnership (12)10.8
    
    First Amendment to Lease, dated May 4, 2001, by and between the Company and Spieker
Properties, L.P. (11)10.9
    
    Second Amendment to Lease, dated July 8, 2004, by and between the Company and
EOP-Industrial Portfolio, LLC (11)10.10
    
    La Jolla Pharmaceutical Company 1994 Stock Incentive Plan (Amended and Restated as
of May 16, 2003) (13)*10.11
    
    La Jolla Pharmaceutical Company 1995 Employee Stock Purchase Plan (Amended and
Restated as of May 24, 2007) 
(33)*10.12
    
    La Jolla Pharmaceutical Company 2004 Equity Incentive Plan (Amended and Restated as
of May 24, 2007 (33)*10.13
    
    Form of Option Grant under the La Jolla Pharmaceutical Company 2004 Equity Incentive
Plan (15)*10.14
    
    Reserved.10.15
    
    Reserved.10.16
    
    Steven B. Engle Employment Agreement (8)*10.17
    
    Amendment No. 1 to Steven B. Engle Employment Agreement (16)*




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##### Table of Contents



Exhibit Number
    
    Description10.18
    
    Amendment No. 2 to Steven B. Engle Employment Agreement (17)*10.19
    
    Amendment No. 3 to Steven B. Engle Employment Agreement (13)*10.20
    
    Amended and Restated Employment Agreement, dated February 23, 2006, by and between
the Company and Matthew Linnik, Ph.D. (1)*10.21
    
    Amended and Restated Employment Agreement, dated February 23, 2006, by and between
the Company and Bruce Bennett, Jr. (1)*10.22
    
    Amended and Restated Employment Agreement, dated February 23, 2006, by and between
the Company and Josefina Elchico (1)*10.23
    
    Amended and Restated Employment Agreement, dated February 23, 2006, by and between
the Company and Paul Jenn, Ph.D. (1)*10.24
    
    Amended and Restated Employment Agreement, dated February 23, 2006, by and between
the Company and Theodora Reilly (1)*10.25
    
    Amended and Restated Employment Agreement, dated February 23, 2006, by and between
the Company and Gail Sloan (1)*10.26
    
    Supplement to employment offer letter for Kenneth R. Heilbrunn (18)*10.27
    
    Retention Agreement, dated October 6, 2005, by and between the Company and Steven
B. Engle (19)*10.28
    
    Retention Agreement, dated October 6, 2005, by and between the Company and Matthew
Linnik, Ph.D. (19)*10.29
    
    Retention Agreement, dated October 6, 2005, by and between the Company and Bruce
Bennett (19)*10.30
    
    Retention Agreement, dated October 6, 2005, by and between the Company and Josefina
T. Elchico (19)*10.31
    
    Retention Agreement, dated October 6, 2005, by and between the Company and Paul
Jenn, Ph.D. (19)*10.32
    
    Retention Agreement, dated October 6, 2005, by and between the Company and Theodora
Reilly (19)*10.33
    
    Retention Agreement, dated October 6, 2005, by and between the Company and Gail
Sloan (19)*10.34
    
    Retention Agreement, dated October 6, 2005, by and between the Company and Andrew
Wiseman, Ph.D. (19)*10.35
    
    Retention Agreement, dated October 6, 2005, by and between the Company and Lisa
Koch (32)*10.36
    
    Underwriting Agreement, dated January 28, 2005, by and between the Company and
Pacific Growth Equities, LLC (20)10.37
    
    Underwriting Agreement, dated as of February 19, 2004, between the Company and
Pacific Growth Equities, LLC (21)10.38
    
    Underwriting Agreement, dated as of August 7, 2003, between the Company and Pacific
Growth Equities, LLC (22)10.39
    
    Registration Rights Agreement, dated October 6, 2005, between the Company and the
initial purchasers (19)10.40
    
    Form of Registration Rights Agreement, dated January 2002, between the Company and
the initial purchasers (23)




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##### Table of Contents



Exhibit Number
    
    Description10.41
    
    Form of Registration Rights Agreement, dated February 5, 2001, between the Company
and the initial purchasers (24)10.42
    
    Form of Registration Rights Agreement, dated July 19, 2000, between the Company and
the initial purchasers (24)10.43
    
    Form of Registration Rights Agreement, dated February 10, 2000, between the Company
and the initial purchasers (24)10.44
    
    Securities Purchase Agreement, dated as of October 6, 2005, between the Company and
the initial purchasers (19)10.45
    
    Form of Stock Purchase Agreement, dated January 2002, between the Company and the
initial purchasers (23)10.46
    
    Form of Stock Purchase Agreement, dated February 5, 2001, between the Company and
the initial purchasers (24)10.47
    
    Form of Stock Purchase Agreement, dated July 19, 2000, between the Company and the
initial purchasers (24)10.48
    
    Form of Stock Purchase Agreement, dated February 10, 2000, between the Company and
the initial purchasers (24)10.51
    
    Master Security Agreement, effective as of September 6, 2002, by and between the
Company and General Electric Capital Corporation (25)10.52
    
    Promissory Note, dated as of December 28, 2006, by and between the Company and
General Electric Capital Corporation (31)10.53
    
    Promissory Note, dated as of September 28, 2004, by and between the Company and
General Electric Capital Corporation (26)10.54
    
    Promissory Note, dated as June 25, 2004, between the Company and General Electric
Capital Corporation (11)10.55
    
    Promissory Note, dated as March 31, 2004, between the Company and General Electric
Capital Corporation (27)10.56
    
    Promissory Note, dated as of December 18, 2003, between the Company and General
Electric Capital Corporation (28)10.57
    
    Promissory Note, dated as of September 26, 2003, between the Company and General
Electric Capital Corporation (24)10.58
    
    Promissory Note, dated as of June 27, 2003, between the Company and General
Electric Capital Corporation (13)10.59
    
    Promissory Note, dated as of April 23, 2003, between the Company and General
Electric Capital Corporation (29)10.60
    
    Promissory Note, dated as of December 30, 2002, between the Company and General
Electric Capital Corporation (29)10.61
    
    Amendment to Promissory Note, dated as of September 27, 2002, by and between the
Company and General Electric Capital Corporation (25)10.62
    
    Promissory Note, dated as of September 26, 2002, by and between the Company and
General Electric Capital Corporation (25)10.63
    
    Employment Agreement, dated March 15, 2006, by and between the Company and Deirdre
Y. Gillespie, M.D. (30)*10.64
    
    Separation Agreement, dated March 17, 2006, by and between the Company and Steven
B. Engle (30)*




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##### Table of Contents



Exhibit Number
    
    Description10.65
    
    Employment Offer Letter, dated July 10, 2006 and executed July 14, 2006, by and
between the Company and Michael Tansey, M.D. (34)*10.66
    
    Employment Agreement, dated December 4, 2006, by and between the Company and
Michael Tansey, M.D. (31)*10.67
    
    Underwriting Agreement, dated as of March 29, 2007, between the Company and Needham
& Company, LLC and A.G. Edwards & Sons, Inc. (38)10.68
    
    Employment Agreement, dated May 10, 2007, by and between the Company and Niv Caviar
(36)*10.69
    
    Promissory Note, dated as of June 28, 2007, between the Company and General
Electric Capital Corporation (35)10.70
    
    Amendment to Chief Executive Officer Employment Agreement (35)*10.71
    
    Promissory Note, dated as of December 31, 2007, between the Company and General
Electric Capital Corporation10.72
    
    Employment Agreement, dated March 4, 2008, by and between the Company and Luke
Seikkula (37)*21.1
    
    Subsidiaries of La Jolla Pharmaceutical Company (15)23.1
    
    Consent of Independent Registered Public Accounting Firm31.1
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    This exhibit is a management contract or compensatory plan or arrangement.(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 Registration Statement on Form 8-A (Registration No.
000-24274) filed December 4, 1998 and incorporated by reference herein.(5)
    
    Previously filed with the Companys Current Report on Form 8-K filed January 26, 2001 and
incorporated by reference herein. The changes effected by the Amendment are also reflected in
the Amendment to Application for Registration on Form 8-A/A filed on January 26, 2001.(6)
    
    Previously filed with the Companys Current Report on Form 8-K filed December 16, 2005 and
incorporated by reference herein.(7)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005 and incorporated by reference herein.(8)
    
    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.




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##### Table of Contents



(9)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 1994 and incorporated by reference herein.(10)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended March
31, 1995 and incorporated by reference herein.(11)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 2004 and incorporated by reference herein.(12)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996 and incorporated by reference herein.(13)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 2003 and incorporated by reference herein.(14)
    
    Previously filed with the Companys Current Report on Form 8-K filed May 20, 2005 and
incorporated by reference herein.(15)
    
    Previously filed with the Companys Annual Report on Form 10-K for the year ended December
31, 2004 and incorporated by reference herein.(16)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 1997 and incorporated by reference herein.(17)
    
    Previously filed with the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 and incorporated by reference herein.(18)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 2002 and incorporated by reference herein.(19)
    
    Previously filed with the Companys Current Report on Form 8-K filed October 7, 2005 and
incorporated by reference herein.(20)
    
    Previously filed with the Companys Current Report on Form 8-K filed January 28, 2005 and
incorporated by reference herein.(21)
    
    Previously filed with the Companys Current Report on Form 8-K filed February 20, 2004 and
incorporated by reference herein.(22)
    
    Previously filed with the Companys Current Report on Form 8-K filed August 12, 2003 and
incorporated by reference herein.(23)
    
    Previously filed with the Companys Current Report on Form 8-K filed January 16, 2002 and
incorporated by reference herein.(24)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003 and incorporated by reference herein.(25)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002 and incorporated by reference herein.(26)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004 and incorporated by reference herein.(27)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended March
31, 2004 and incorporated by reference herein.




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##### Table of Contents



(28)
    
    Previously filed with the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 and incorporated by reference herein.(29)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended March
31, 2003 and incorporated by reference herein.(30)
    
    Previously filed with the Companys Current Report on Form 8-K filed March 20, 2006 and
incorporated by reference herein.(31)
    
    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.(32)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 2006 and incorporated by reference herein.(33)
    
    Previously filed with the Companys Registration Statement on Form S-8 filed June 12, 2007
and incorporated by reference herein.(34)
    
    Previously filed with the Companys Current Report on Form 8-K filed July 18, 2006 and
incorporated by reference herein.(35)
    
    Previously filed with the Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 2007 and incorporated by reference herein.(36)
    
    Previously filed with the Companys Current Report on Form 8-K filed May 10, 2007 and
incorporated by reference herein.(37)
    
    Previously filed with the Companys Current Report on Form 8-K filed March 4, 2008 and
incorporated by reference herein.(38)
    
    Previously filed with the Companys Current Report on Form 8-K filed March 30, 2007 and
incorporated by reference herein.