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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 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
(State or other jurisdiction of 
incorporation or organization)
    
    33-0361285
(I.R.S. Employer
Identification No.)
 4365 Executive Drive, Suite 300
San Diego, CA
(Address of principal executive offices)
    
    92121
(Zip Code)
  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 Consolidated Financial Statements  UnauditedCondensed Consolidated Balance Sheets as of June 30, 2009 and
December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations for the three and six months
ended June 30, 2009 and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 2009 and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4ITEM 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    11ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    15ITEM 4. Controls and Procedures
    
    
    15PART II. OTHER INFORMATIONITEM 1.A. Risk Factors
    
    
    16ITEM 6. Exhibits
    
    
    17SIGNATURES
    
    
    18Exhibit 31.1Exhibit 31.2Exhibit 32.1




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PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
 LA JOLLA PHARMACEUTICAL COMPANY
 
 Condensed Consolidated Balance Sheets
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (See Note)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    8,509
    
    
    $
    9,447Short-term investments
    
    
    
    
    
    
    10,000Prepaids and other current assets
    
    
    1,254
    
    
    
    785Total current assets
    
    
    9,763
    
    
    
    20,232Property and equipment, net
    
    
    11
    
    
    
    357Patent costs and other assets, net
    
    
    
    
    
    
    250Total assets
    
    $
    9,774
    
    
    $
    20,839LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,790
    
    
    $
    4,626Accrued clinical/regulatory expenses
    
    
    321
    
    
    
    3,957Accrued expenses
    
    
    555
    
    
    
    1,008Accrued payroll and related expenses
    
    
    128
    
    
    
    1,549Credit facility
    
    
    
    
    
    
    5,933Current portion of obligations under notes payable
    
    
    
    
    
    
    152Current portion of obligations under capital leases
    
    
    42
    
    
    
    11Total current liabilities
    
    
    3,836
    
    
    
    17,236Noncurrent portion of obligations under notes payable
    
    
    
    
    
    
    179Noncurrent portion of obligations under capital leases
    
    
    
    
    
    
    34CommitmentsStockholders equity:Common stock
    
    
    657
    
    
    
    555Additional paid-in capital
    
    
    427,263
    
    
    
    418,522Accumulated deficit
    
    
    (421,982
    )
    
    
    (415,687
    )Total stockholders equity
    
    
    5,938
    
    
    
    3,390Total liabilities and stockholders equity
    
    $
    9,774
    
    
    $
    20,839
    1




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LA JOLLA PHARMACEUTICAL COMPANY
 
 Condensed Consolidated Statements of Operations
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue from collaboration agreement
    
    $
    
    
    
    $
    
    
    
    $
    8,125
    
    
    $
    Expenses:Research and development
    
    
    (85
    )
    
    
    12,732
    
    
    
    9,808
    
    
    
    24,070General and administrative
    
    
    2,124
    
    
    
    2,069
    
    
    
    4,611
    
    
    
    3,975Total expenses
    
    
    2,039
    
    
    
    14,801
    
    
    
    14,419
    
    
    
    28,045Loss from operations
    
    
    (2,039
    )
    
    
    (14,801
    )
    
    
    (6,294
    )
    
    
    (28,045
    )Interest income
    
    
    
    
    
    
    130
    
    
    
    12
    
    
    
    490Interest expense
    
    
    (4
    )
    
    
    (44
    )
    
    
    (13
    )
    
    
    (60
    )Realized loss on investments, net
    
    
    
    
    
    
    (220
    )
    
    
    
    
    
    
    (957
    )Net loss
    
    $
    (2,043
    )
    
    $
    (14,935
    )
    
    $
    (6,295
    )
    
    $
    (28,572
    )Basic and diluted net loss per share
    
    $
    (0.03
    )
    
    $
    (0.31
    )
    
    $
    (0.10
    )
    
    $
    (0.65
    )Shares used in computing basic and
diluted net loss per share
    
    
    65,723
    
    
    
    48,252
    
    
    
    60,945
    
    
    
    43,941
   2




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LA JOLLA PHARMACEUTICAL COMPANY
 
 Condensed Consolidated Statements of Cash Flows
   Six Months EndedJune 30,2009
    
    
    2008Operating activities:Net loss
    
    $
    (6,295
    )
    
    $
    (28,572
    )Adjustments to reconcile net loss to net cash used for operating
activities:Depreciation and amortization
    
    
    110
    
    
    
    519(Gain) loss on write-off/disposal of patents and property and equipment
    
    
    (326
    )
    
    
    95Share-based compensation expense
    
    
    2,033
    
    
    
    2,297Settlement of accounts payable and accrued liabilities
    
    
    (1,880
    )
    
    
    Realized loss on investments, net
    
    
    
    
    
    
    957Amortization of premium on investments
    
    
    
    
    
    
    329Change in operating assets and liabilities:Prepaids and other current assets
    
    
    (469
    )
    
    
    (472
    )Accounts payable and accrued liabilities
    
    
    (4,045
    )
    
    
    (196
    )Accrued payroll and related expenses
    
    
    (1,421
    )
    
    
    122Net cash used for operating activities
    
    
    (12,293
    )
    
    
    (24,921
    )Investing activities:Sales of short-term investments
    
    
    10,000
    
    
    
    24,665Net proceeds
from sale of patents and property and equipment
    
    
    836
    
    
    
    43Additions to property and equipment
    
    
    (18
    )
    
    
    (446
    )Increase in patent costs and other assets
    
    
    (6
    )
    
    
    (161
    )Net cash provided by investing activities
    
    
    10,812
    
    
    
    24,101Financing activities:Net proceeds from issuance of common stock
    
    
    
    
    
    
    28,246Net proceeds from issuance of preferred stock
    
    
    6,810
    
    
    
    Payments on credit facility
    
    
    (5,933
    )
    
    
    Payments on obligations under notes payable
    
    
    (331
    )
    
    
    (75
    )Payments on obligations under capital leases
    
    
    (3
    )
    
    
    (5
    )Net cash provided by financing activities
    
    
    543
    
    
    
    28,166Net (decrease) increase in cash and cash equivalents
    
    
    (938
    )
    
    
    27,346Cash and cash equivalents at beginning of period
    
    
    9,447
    
    
    
    4,373Cash and cash equivalents at end of period
    
    $
    8,509
    
    
    $
    31,719
   3




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LA JOLLA PHARMACEUTICAL COMPANY
 
 Notes to Condensed Consolidated Financial Statements
 (
 June 30, 2009
 1. Basis of Presentation
  ®
     4




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2. Accounting Policies
 Principles of Consolidation
  Use of Estimates
  Recent Accounting Pronouncements
 Accounting for Collaborative
Arrangements Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors Products)
 Subsequent Events
 Hierarchy of Generally Accepted Accounting
Principles
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles
  5




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Revenue Recognition
  Revenue Recognition Revenue
Arrangements with Multiple Deliverables
 Net Loss Per Share
 Earnings per Share
  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
   6




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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.
  Accounting for Certain
Investments in Debt and Equity Securities
  4. Development and Stock Purchase Agreements
    7




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5. Stockholders Equity
 Share-Based Compensation
    Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services
 Share Based Payment,
  8




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Research and development
    
    $
    566
    
    
    $
    536
    
    
    $
    632
    
    
    $
    1,001General and administrative
    
    
    925
    
    
    
    636
    
    
    
    1,402
    
    
    
    1,288Share-based compensation
expense included in
operating expenses
    
    $
    1,491
    
    
    $
    1,172
    
    
    $
    2,034
    
    
    $
    2,289
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Options:
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Risk-free interest rate
    
    
    
    
    
    
    3.3
    %
    
    
    0.6
    %
    
    
    3.1
    %Dividend yield
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Volatility
    
    
    
    
    
    
    126.2
    %
    
    
    295.0
    %
    
    
    116.8
    %Expected life (years)
    
    
    
    
    
    
    5.6
    
    
    
    1.0
    
    
    
    5.6
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,ESPP:
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Risk-free interest rate
    
    
    
    
    
    
    1.7
    %
    
    
    
    
    
    
    1.9
    %Dividend yield
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %Volatility
    
    
    
    
    
    
    67.5
    %
    
    
    
    
    
    
    79.4
    %Expected life (months)
    
    
    
    
    
    
    3.0
    
    
    
    
    
    
    
    3.0
    9




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Outstanding OptionsWeighted-AverageNumber of
    
    
    ExerciseShares
    
    
    PriceBalance at December 31, 2008
    
    
    5,626,960
    
    
    $
    6.80Granted
    
    
    691,875
    
    
    $
    1.73Exercised
    
    
    
    
    
    $
    Forfeited or expired
    
    
    (1,646,424
    )
    
    $
    4.48Balance at June 30, 2009
    
    
    4,672,411
    
    
    $
    6.86
 6. Restructuring Costs
 Employers Accounting for Postemployment Benefits Accounting for
Costs Associated with Exit or Disposal Activities
 7. Commitments and Contingencies
    8. Settlement of Liabilities
   9. Subsequent Events
   10




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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
   11




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Critical Accounting Policies and Estimates
   Revenue Recognition
 Revenue Recognition Revenue Arrangements with Multiple Deliverables Accounting for Collaborative Arrangements
 Impairment and useful lives of long-lived assets
    12




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Accrued clinical/regulatory expenses
  Share-Based Compensation
 Share-Based Payment
  Recent Accounting Pronouncements
 Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors Products)
 Results of Operations
   13




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Fair Value Measurements
 Liquidity and Capital Resources
    14




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Off-Balance Sheet Arrangements
  
 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.
  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 significant value for their shares.
  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.
      16




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Our common stock price is volatile and may continue to decline.
  
    
    limited financial resources;
    
    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; and
    
    general market conditions and comments by securities analysts.
  
 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
    
    
    Amended and Restated Rights Agreement, dated as of December 2, 2008, between
the Company and American Stock Transfer & Trust Company (3)4.3
    
    
    Amendment No. 1 to Amended and Restated Rights Agreement, dated as of January
20, 2009, between the Company and American Stock Transfer & Trust Company (5)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.(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 Current Report on Form 8-K filed January 26, 2009 and incorporated by reference herein.  17




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SIGNATURES
  La Jolla Pharmaceutical CompanyDate:  August 17, 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)  18




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LA JOLLA PHARMACEUTICAL COMPANY
 
 INDEX TO EXHIBITS
 ExhibitNumber
    
    Description31.1
    
    
    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