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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 September 30, 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
    
    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)
   þ o
  o þ 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 September 30, 2007 and
December 31, 2006
    
    
    1Condensed Consolidated Statements of Operations for the three and nine months
ended September 30, 2007 and 2006
    
    
    2Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 2007 and 2006
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4ITEM 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    8ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    13ITEM 4. Controls and Procedures
    
    
    13PART II. OTHER INFORMATIONITEM 6. Exhibits
    
    
    14SIGNATURES
    
    
    15EXHIBIT 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
 September 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)
    
    
    (See Note)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    5,169
    
    
    $
    3,829Short-term investments
    
    
    44,902
    
    
    
    39,080Prepaids and other current assets
    
    
    953
    
    
    
    1,004Total current assets
    
    
    51,024
    
    
    
    43,913Property and equipment, net
    
    
    1,304
    
    
    
    2,333Patent costs and other assets, net
    
    
    3,033
    
    
    
    3,279Total assets
    
    $
    55,361
    
    
    $
    49,525LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,866
    
    
    $
    2,125Accrued clinical/regulatory expenses
    
    
    3,932
    
    
    
    1,530Accrued expenses
    
    
    1,516
    
    
    
    1,137Accrued payroll and related expenses
    
    
    1,011
    
    
    
    1,265Current portion of obligations under notes payable
    
    
    95
    
    
    
    183Total current liabilities
    
    
    8,420
    
    
    
    6,240Noncurrent portion of obligations under notes payable
    
    
    186
    
    
    
    196CommitmentsStockholders equity:Common stock
    
    
    396
    
    
    
    327Additional paid-in capital
    
    
    384,775
    
    
    
    342,519Other comprehensive income
    
    
    17
    
    
    
    Accumulated deficit
    
    
    (338,433
    )
    
    
    (299,757
    )Total stockholders equity
    
    
    46,755
    
    
    
    43,089Total liabilities and stockholders equity
    
    $
    55,361
    
    
    $
    49,525
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LA JOLLA PHARMACEUTICAL COMPANY
 
 Condensed Consolidated Statements of Operations
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Expenses:Research and development
    
    $
    11,448
    
    
    $
    7,687
    
    
    $
    34,009
    
    
    $
    23,764General and administrative
    
    
    2,585
    
    
    
    1,546
    
    
    
    6,677
    
    
    
    7,171Total expenses
    
    
    14,033
    
    
    
    9,233
    
    
    
    40,686
    
    
    
    30,935Loss from operations
    
    
    (14,033
    )
    
    
    (9,233
    )
    
    
    (40,686
    )
    
    
    (30,935
    )Interest income
    
    
    752
    
    
    
    701
    
    
    
    2,084
    
    
    
    2,211Interest expense
    
    
    (8
    )
    
    
    (6
    )
    
    
    (74
    )
    
    
    (27
    )Net loss
    
    $
    (13,289
    )
    
    $
    (8,538
    )
    
    $
    (38,676
    )
    
    $
    (28,751
    )Basic and diluted net loss per share
    
    $
    (0.34
    )
    
    $
    (0.26
    )
    
    $
    (1.04
    )
    
    $
    (0.88
    )Shares used in computing basic and
diluted net loss per share
    
    
    39,577
    
    
    
    32,534
    
    
    
    37,215
    
    
    
    32,510
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LA JOLLA PHARMACEUTICAL COMPANY
 
 Condensed Consolidated Statements of Cash Flows
 Nine Months EndedSeptember 30,2007
    
    
    2006Operating activities:Net loss
    
    $
    (38,676
    )
    
    $
    (28,751
    )Adjustments to reconcile net loss to net cash used for operating
activities:Depreciation and amortization
    
    
    1,300
    
    
    
    1,507Loss on write-off/disposal of patents and property and equipment
    
    
    691
    
    
    
    172Share-based compensation expense
    
    
    3,715
    
    
    
    4,170Accretion of interest income, net
    
    
    (140
    )
    
    
    46Change in operating assets and liabilities:Prepaids and other current assets
    
    
    51
    
    
    
    (177
    )Accounts payable
    
    
    (259
    )
    
    
    749Accrued clinical/regulatory expenses
    
    
    2,402
    
    
    
    560Accrued expenses
    
    
    379
    
    
    
    149Accrued payroll and related expenses
    
    
    (254
    )
    
    
    (163
    )Net cash used for operating activities
    
    
    (30,791
    )
    
    
    (21,738
    )Investing activities:Purchases of short-term investments
    
    
    (47,415
    )
    
    
    (16,700
    )Sales of short-term investments
    
    
    41,750
    
    
    
    40,050Additions to property and equipment
    
    
    (117
    )
    
    
    (316
    )Increase in patent costs and other assets
    
    
    (599
    )
    
    
    (362
    )Net cash (used for) provided by investing activities
    
    
    (6,381
    )
    
    
    22,672Financing activities:Net proceeds from issuance of common stock
    
    
    38,610
    
    
    
    192Proceeds from issuance of notes payable
    
    
    75
    
    
    
    Payments on obligations under notes payable
    
    
    (173
    )
    
    
    (451
    )Net cash provided by (used for) financing activities
    
    
    38,512
    
    
    
    (259
    )Net increase in cash and cash equivalents
    
    
    1,340
    
    
    
    675Cash and cash equivalents at beginning of period
    
    
    3,829
    
    
    
    6,411Cash and cash equivalents at end of period
    
    $
    5,169
    
    
    $
    7,086Supplemental disclosure of cash flow information:Interest paid
    
    $
    74
    
    
    $
    27Supplemental schedule of noncash investing and financing
activities:Net unrealized gains on available-for-sale investments
    
    $
    17
    
    
    $
    
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LA JOLLA PHARMACEUTICAL COMPANY
 
 Notes to Condensed Consolidated Financial Statements
 September 30, 2007
 1. Basis of Presentation
  2. Accounting Policies
 Principles of Consolidation
  Use of Estimates
  Recent Accounting Pronouncement
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
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Net Loss Per Share
 Earnings per Share
  Comprehensive Loss
 Reporting Comprehensive Income (Loss)
 3. Severance Charges
  4. Stockholders Equity
 Share-Based Compensation
    5




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Share-Based Payment
 Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Research and development
    
    $
    378
    
    
    $
    446
    
    
    $
    1,560
    
    
    $
    1,590General and administrative
    
    
    756
    
    
    
    696
    
    
    
    2,153
    
    
    
    2,578Share-based compensation
expense included in
operating expenses
    
    $
    1,134
    
    
    $
    1,142
    
    
    $
    3,713
    
    
    $
    4,168
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Options:
    
    September 30,2007
    
    2006Risk-free interest rate
    
    
    4.7
    %
    
    
    4.9
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Volatility
    
    
    118.5
    %
    
    
    113.9
    %Expected life (years)
    
    
    5.5 - 6.1
    
    
    
    5.5 - 6.1
 ESPP:
    
    September 30,2007
    
    2006Risk-free interest rate
    
    
    4.8
    %
    
    
    4.8
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Volatility
    
    
    72.1
    %
    
    
    46.0
    %Expected life
    
    3 months
    
    3 months
   Outstanding OptionsWeighted-AverageNumber of
    
    ExerciseShares
    
    PriceBalance at December 31, 2006
    
    
    4,302,379
    
    
    $
    9.83Granted
    
    
    971,973
    
    
    $
    4.32Exercised
    
    
    (165,922
    )
    
    $
    3.01Forfeited or expired
    
    
    (314,857
    )
    
    $
    15.20Balance at September 30, 2007
    
    
    4,793,573
    
    
    $
    8.59
  5. Income Taxes
 Accounting for Uncertainty in
Income Taxes  An Interpretation of FASB Statement No. 109
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6. Changes in Securities
  
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
 ®
 8




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Developments in 2007
      9




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Overview
    Critical Accounting Policies and Estimates
 Impairment and useful lives of long-lived assets
  10




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Recent Accounting Pronouncements
  Results of Operations
      11




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Liquidity and Capital Resources
     Payment due by periodLess than
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    1 Year
    
    1-3 Years
    
    3-5 Years
    
    5 YearsLong-Term Debt Obligations
    
    $
    323
    
    
    $
    118
    
    
    $
    205
    
    
    $
    
    
    
    $
    Operating Lease Obligations
    
    
    1,645
    
    
    
    822
    
    
    
    823
    
    
    
    
    
    
    
    Purchase Obligations
    
    
    1,303
    
    
    
    1,303
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    3,271
    
    
    $
    2,243
    
    
    $
    1,028
    
    
    $
    
    
    
    $
    
  12




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
  13




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PART II. OTHER INFORMATION
 
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description3.1
    
    Restated Certificate of Incorporation (1)3.2
    
    Amended and Restated Bylaws (2)4.1
    
    Rights Agreement, dated as of December 3, 1998, between the Company
and American Stock Transfer & Trust Company (3)4.2
    
    Amendment No. 1 to the Rights Agreement, dated as of July 21, 2000,
between the Company and American Stock Transfer & Trust Company (4)4.3
    
    Amendment No. 2 to the Rights Agreement, dated as of December 14,
2005, between the Company and American Stock Transfer & Trust Company
(5)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)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
 
 (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 (Registration No.
000-24274) filed December 4, 1998 and incorporated by reference herein.(4)
    
    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.(5)
    
    Previously filed with the Companys Current Report on Form 8-K filed December 16, 2005 and
incorporated by reference herein. 14




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SIGNATURES
  La Jolla Pharmaceutical CompanyDate:  November 8, 2007
    /s/ Deirdre Y. GillespieDeirdre Y. Gillespie, M.D.President and Chief Executive Officer
(On behalf of the Registrant)/s/ Niv E. CaviarNiv E. CaviarExecutive Vice President, Chief Business Officer
and Chief Financial Officer
(As Principal Financial Officer)/s/ Gail A. SloanGail A. SloanVice President of Finance and Secretary
(As Principal Accounting Officer) 15




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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