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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the quarterly period ended March 31, 2009
 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
    
    33-0361285(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)6455 Nancy Ridge Drive
    
    92121San Diego, CA
    
    (Zip Code)(Address of principal executive offices)
  Yes
þ No
o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ




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##### 



LA JOLLA PHARMACEUTICAL COMPANY
FORM 10-Q
QUARTERLY REPORT
 INDEX
 PART I. FINANCIAL INFORMATIONITEM 1. Condensed Financial Statements  UnauditedCondensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations for the three months ended March 31, 2009 and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    15ITEM 4. Controls and Procedures
    
    
    15PART II. OTHER INFORMATIONITEM 1. A. Risk Factors
    
    
    16ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19ITEM 6. Exhibits
    
    
    20SIGNATURES
    
    
    21Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 32.1




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. CONDENSED FINANCIAL STATEMENTS  UNAUDITED
 LA JOLLA PHARMACEUTICAL COMPANY
 
 Condensed Consolidated Balance Sheets
 March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (See Note)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    17,563
    
    
    $
    9,447Short-term investments
    
    
    
    
    
    
    10,000Prepaids and other current assets
    
    
    1,561
    
    
    
    785Total current assets
    
    
    19,124
    
    
    
    20,232Property and equipment, net
    
    
    302
    
    
    
    357Patent costs and other assets, net
    
    
    252
    
    
    
    250Total assets
    
    $
    19,678
    
    
    $
    20,839LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    9,771
    
    
    $
    4,626Accrued clinical/regulatory expenses
    
    
    909
    
    
    
    3,957Accrued expenses
    
    
    331
    
    
    
    1,008Accrued payroll and related expenses
    
    
    782
    
    
    
    1,549Accrued severance
    
    
    1,048
    
    
    
    Credit facility
    
    
    
    
    
    
    5,933Current portion of obligations under notes payable
    
    
    155
    
    
    
    152Current portion of obligations under capital leases
    
    
    11
    
    
    
    11Total current liabilities
    
    
    13,007
    
    
    
    17,236Non-current portion of obligations under notes payable
    
    
    149
    
    
    
    179Non-current portion of obligations under capital leases
    
    
    32
    
    
    
    34CommitmentsStockholders equity:Common stock
    
    
    657
    
    
    
    555Additional paid-in capital
    
    
    425,772
    
    
    
    418,522Accumulated deficit
    
    
    (419,939
    )
    
    
    (415,687
    )Total stockholders equity
    
    
    6,490
    
    
    
    3,390Total liabilities and stockholders equity
    
    $
    19,678
    
    
    $
    20,839
    1




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LA JOLLA PHARMACEUTICAL COMPANY
 
 Condensed Consolidated Statements of Operations
 Three Months EndedMarch 31,2009
    
    
    2008Revenue from collaboration agreement
    
    $
    8,125
    
    
    $
    Expenses:Research and development
    
    
    9,893
    
    
    
    11,338General and administrative
    
    
    2,487
    
    
    
    1,906Total expenses
    
    
    12,380
    
    
    
    13,244Loss from operations
    
    
    (4,255
    )
    
    
    (13,244
    )Interest income
    
    
    12
    
    
    
    360Interest expense
    
    
    (9
    )
    
    
    (16
    )Realized loss on investments, net
    
    
    
    
    
    
    (737
    )Net loss
    
    $
    (4,252
    )
    
    $
    (13,637
    )Basic and diluted net loss per share
    
    $
    (0.08
    )
    
    $
    (0.34
    )Shares used in computing basic and diluted net loss per share
    
    
    56,115
    
    
    
    39,631
   2




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##### Table of Contents



LA JOLLA PHARMACEUTICAL COMPANY
 
 Condensed Consolidated Statements of Cash Flows
 Three Months EndedMarch 31,2009
    
    
    2008Operating activities:Net loss
    
    $
    (4,252
    )
    
    $
    (13,637
    )Adjustments to reconcile net loss to net cash used for operating activities:Depreciation and amortization
    
    
    74
    
    
    
    284Loss on write-off/disposal of patents and property and equipment
    
    
    
    
    
    
    23Share-based compensation expense
    
    
    542
    
    
    
    1,117Realized loss on investments, net
    
    
    
    
    
    
    737Amortization of investment premium
    
    
    
    
    
    
    243Change in operating assets and liabilities:Prepaids and other current assets
    
    
    (776
    )
    
    
    48Accounts payable
    
    
    5,145
    
    
    
    875Accrued clinical/regulatory expenses
    
    
    (3,048
    )
    
    
    (2,175
    )Accrued expenses
    
    
    (677
    )
    
    
    85Accrued payroll and related expenses
    
    
    (767
    )
    
    
    (498
    )Accrued severance
    
    
    1,048
    
    
    
    Net cash used for operating activities
    
    
    (2,711
    )
    
    
    (12,898
    )Investing activities:Sales of short-term investments
    
    
    10,000
    
    
    
    24,665Additions to property and equipment
    
    
    (18
    )
    
    
    (32
    )Increase in patent costs and other assets
    
    
    (3
    )
    
    
    (99
    )Net cash provided by investing activities
    
    
    9,979
    
    
    
    24,534Financing activities:Net proceeds from issuance of common stock
    
    
    
    
    
    
    71Net proceeds from issuance of preferred stock
    
    
    6,810
    
    
    
    Payments on credit facility
    
    
    (5,933
    )
    
    
    Payments on obligations under notes payable
    
    
    (27
    )
    
    
    (42
    )Payments on obligations under capital leases
    
    
    (2
    )
    
    
    (3
    )Net cash provided by financing activities
    
    
    848
    
    
    
    26Net increase in cash and cash equivalents
    
    
    8,116
    
    
    
    11,662Cash and cash equivalents at beginning of period
    
    
    9,447
    
    
    
    4,373Cash and cash equivalents at end of period
    
    $
    17,563
    
    
    $
    16,035
   3




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LA JOLLA PHARMACEUTICAL COMPANY
 
 Notes to Condensed Consolidated Financial Statements
 March 31, 2009
 1. Basis of Presentation
  ®
   
    
    Sell or out-license the Companys remaining assets, including the Companys SSAO
compounds, although significant value is not expected to be received for them;
 
    
    Pursue other potential strategic transactions, which could include mergers, license
agreements or other collaborations, with third parties; or
 
    
    Implement an orderly wind down of the Company if other alternatives are not deemed
viable and in the best interests of the Company.
  4




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2. Accounting Policies
 Principles of Consolidation
  Use of Estimates
  Recent Accounting Pronouncement
 Accounting for Collaborative
Arrangements Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors Products)
 Revenue Recognition
 Revenue Recognition Revenue
Arrangements with Multiple Deliverables
 Net Loss Per Share
 Earnings per Share
  5




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Comprehensive Loss
 Reporting Comprehensive Income (Loss)
 Impairment of Long-Lived Assets and Assets to Be Disposed Of
 Accounting for the Impairment or Disposal of Long-Lived Assets
   3. Fair Value of Financial Instruments
 Fair Value Measurements
 
    
    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.
  6




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Accounting for Certain
Investments in Debt and Equity Securities
  4. Development and Stock Purchase Agreements
     5. Stockholders Equity
 Share-Based Compensation
   7




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Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services
   Three Months EndedMarch 31,2009
    
    
    2008Research and development
    
    $
    66
    
    
    $
    465General and administrative
    
    
    476
    
    
    
    652Share-based compensation expense included in operating expenses
    
    $
    542
    
    
    $
    1,117
   8




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March 31,2009
    
    
    2008Options:Risk-free interest rate
    
    
    0.6
    %
    
    
    3.0
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Volatility
    
    
    295.0
    %
    
    
    108.9
    %Expected life (years)
    
    
    1.0
    
    
    
    5.6
 March 31,2008ESPP:Risk-free interest rate
    
    
    2.1
    %Dividend yield
    
    
    0.0
    %Volatility
    
    
    90.9
    %Expected life (months)
    
    
    3
    Outstanding OptionsWeighted-AverageNumber of
    
    
    ExerciseShares
    
    
    PriceBalance at December 31, 2008
    
    
    5,626,960
    
    
    $
    6.80Granted
    
    
    691,875
    
    
    $
    1.73Exercised
    
    
    
    
    
    $
    Forfeited or expired
    
    
    (416,756
    )
    
    $
    9.47Balance at March 31, 2009
    
    
    5,902,079
    
    
    $
    6.01
 6. Restructuring Costs
 Employers Accounting for Postemployment Benefits Accounting for
Costs Associated with Exit or Disposal Activities
 7.
Commitments and Contingencies
    9




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
  Overview and Recent Developments
    Employers Accounting for Postemployment Benefits Accounting for Costs Associated with Exit or Disposal Activities
  10




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
    
    Sell or out-license our remaining assets, including our SSAO compounds, although we
do not expect to receive any significant value for them;
 
    
    Pursue other potential strategic transactions, which could include mergers, license
agreements or other collaborations, with third parties; or
 
    
    Implement an orderly wind down of the Company if other alternatives are not deemed
viable and in the best interests of the Company.
    Critical Accounting Policies and Estimates
    11




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Revenue
recognition
 Revenue Recognition Revenue Arrangements with Multiple Deliverables Accounting for Collaborative Arrangements
 Impairment and useful lives of long-lived assets
    Accrued clinical/regulatory expenses
  Share-based compensation
 Share-Based Payment
  12




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Recent Accounting Pronouncements
 Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors Products)
 Results of Operations
      Liquidity and Capital Resources
   13




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Payment due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsLong-Term Debt Obligations
    
    $
    341
    
    
    $
    180
    
    
    $
    161
    
    
    $
    
    
    
    $
    Capital Lease Obligations
    
    
    51
    
    
    
    15
    
    
    
    36
    
    
    
    
    
    
    
    Operating Lease Obligations
    
    
    429
    
    
    
    278
    
    
    
    140
    
    
    
    11
    
    
    
    Purchase Obligations
    
    
    50
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    871
    
    
    $
    523
    
    
    $
    337
    
    
    $
    11
    
    
    $
    
   
    
    our ability to sell, out-license or otherwise dispose of our assets, including our
SSAO compounds, although we do not expect to receive any significant value for them;
 
    
    our ability to consummate a merger with another company; or
 
    
    our ability to negotiate favorable settlement terms with our creditors, as well as
any actions that may be taken by our creditors, which could force us to wind down the
Company.
  Off-Balance Sheet Arrangements
   14




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
    15




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PART II. OTHER INFORMATION
 
 ITEM 1.A. Risk Factors
 I. RISK FACTORS RELATING TO LA JOLLA PHARMACEUTICAL COMPANY AND THE INDUSTRY IN WHICH WE OPERATE.
  In light of our decision to discontinue development of our Riquent clinical program, we are seeking
to maximize the value of our remaining assets, address our liabilities and attempt to pursue
mergers or similar strategic transactions. We may be unable to satisfy our liabilities and can
provide no assurances that we can be successful in pursuing a strategic transaction.
    We may need to liquidate the Company in a voluntary dissolution under Delaware law or seek
protection under the provisions of the U.S. Bankruptcy Code, and, in either event, it is unlikely
that stockholders would receive any value for their shares.
   16




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We recorded an impairment loss for the year ended December 31, 2008 and may need to record
additional charges in the future.
 Accounting for
the Impairment or Disposal of Long-Lived Assets
 We face environmental liabilities related to certain hazardous materials used in our operations.
  II. RISK FACTORS RELATED SPECIFICALLY TO OUR STOCK.
 The price of our common stock has been volatile and has declined significantly and we may face
delisting from Nasdaq.
    17




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Our common stock price is volatile and may continue to decline.
  
    
    limited financial resources;
    
    announcements regarding mergers or other strategic transactions, as well as rumors and
speculation around the potential events;
    
    future sales of significant amounts of our common stock by us or our stockholders;
    
    actions or decisions by our creditors;
    
    actions or decisions by The Nasdaq Stock Market with respect to the listing of our common stock;
    
    developments concerning potential and existing agreements with collaborators; and
    
    general market conditions and comments by securities analysts.
  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.
   18




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Anti-takeover devices may prevent changes in our board of directors and management.
   Future sales of our stock by our stockholders could negatively affect the market price of our
stock.
   
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
   19




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ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description3.1
    
    
    Restated Certificate of Incorporation (1)3.2
    
    
    Amended and Restated Bylaws (2)3.3
    
    
    Certificate of Designations of Series A Junior Participating Preferred Stock (3)4.1
    
    
    Form of Common Stock Certificate (4)4.2
    
    
    Rights Agreement, dated as of December 3, 1998, between the Company and
American Stock Transfer & Trust Company (5)4.3
    
    
    Amended and Restated Rights Agreement, dated as of December 2, 2008, between
the Company and American Stock Transfer & Trust Company (3)4.4
    
    
    Amendment No. 1 to Amended and Restated Rights Agreement, dated as of January
20, 2009, between the Company and American Stock Transfer & Trust Company (7)10.1
    
    
    Development and Commercialization Agreement, dated as of January 4, 2009, by
and between the Company and BioMarin CF Limited*10.2
    
    
    Securities Purchase Agreement, dated as of January 4, 2009, by and between the
Company and BioMarin Pharmaceutical Inc.*10.3
    
    
    Amendment No. 1 to Development and Commercialization Agreement, dated as of
January 4, 2009, by and between the Company and BioMarin CF Limited*10.4
    
    
    Amendment No. 1 to Securities Purchase Agreement, dated as of January 4, 2009,
by and between the Company and BioMarin Pharmaceutical Inc.*31.1
    
    
    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
  *
    
    Filed herewith.
    
    Confidential treatment requested.(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 8-A/A filed December 4,
2008 and incorporated by reference herein.(4)
    
    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.(5)
    
    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.(6)
    
    Previously filed with the Companys Current Report on Form 8-K filed December 4, 2008 and
incorporated by reference herein.(7)
    
    Previously filed with the Companys Registration Statement on Form 8-A/A (Registration No.
000-24274) filed January 26, 2009 and incorporated by reference herein.  20




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SIGNATURES
  La Jolla Pharmaceutical CompanyDate:  May 15, 2009
    /s/ Deirdre Y. GillespieDeirdre Y. Gillespie, M.D.President and Chief Executive Officer
(On behalf of the Registrant)/s/ Gail A. SloanGail A. SloanVice President of Finance and Secretary
(As Principal Financial and Accounting Officer)  21




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LA JOLLA PHARMACEUTICAL COMPANY
 
 INDEX TO EXHIBITS
 ExhibitNumber
    
    Description10.1
    
    
    Development and Commercialization Agreement, dated as of January 4, 2009, by
and between the Company and BioMarin CF Limited*10.2
    
    

Securities Purchase Agreement, dated as of January 4, 2009, by and between the
Company and BioMarin Pharmaceutical Inc.*10.3
    
    
    Amendment No. 1 to Development and Commercialization Agreement, dated as of
January 4, 2009, by and between the Company and BioMarin CF Limited*10.4
    
    
    Amendment No. 1 to Securities Purchase Agreement, dated as of January 4, 2009,
by and between the Company and BioMarin Pharmaceutical Inc.*31.1
    
    
    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
  *
    
    Filed herewith.
    
    Confidential treatment requested.  22