A.P. Pharma is a specialty pharmaceutical company focused on the development of ethical (prescription) pharmaceuticals utilizing its proprietary polymer-based drug delivery systems. The Company's primary focus is the development and commercialization of its bioerodible injectable and implantable systems under the trade name Biochronomer(TM). Initial targeted areas of application for the Company's drug delivery technology include pain management inflammation oncology and ophthalmology applications. A.P. Pharma Inc. has a market cap of $16.7 million; its shares were traded at around $0.5401 with and P/S ratio of 45.3.
Highlight of Business Operations:Our revenue has been derived principally from contract revenue. In January 2006, we completed the sale of our rights to royalties on sales of Retin-A Micro® and Carac® for up to $30 million. We received proceeds of $25 million upon the closing of the transaction and received a $2.5 million milestone payment in June 2007, which were recorded as gain on sale of interest in royalties. We may receive up to an additional $2.5 million based on the satisfaction of certain predetermined milestones. As a result of this transaction, there were no royalties for the first quarter of 2009 and 2008. We will not record additional royalty revenue on sales of Retin-A Micro® and Carac® in future periods.
Research and development expense for the three months ended March 31, 2009 decreased by $4,090,000 from $6,140,000 for the three months ended March 31, 2008 to $2,050,000 primarily due to decreased expenditures related to APF530, largely as a result of the completion of our Phase III trial for APF530. Additionally, we have placed our other products on hold to focus our financial and managerial resources on APF 530. As a result, we had a reduction in force in November 2008, resulting in lower payroll and related expenses. Changes in the rate of research and development expenses for the remaining quarters of 2009 will depend primarily on the availability of financial resources to continue and expand our current research and development activities.
General and administrative expense decreased for the three months ended March 31, 2009 by $153,000 from $1,080,000 for the three months ended March 31, 2008 to $927,000 due primarily as a result of cost containment measures taken and decreased bonus and stock-based compensation costs. Changes in the rate of general and administrative expenses for the remaining quarters of 2009 will depend primarily on the achievement of goals.
Net interest income decreased for the three months ended March 31, 2009 by $271,000 to $9,000 from $280,000 for the three months ended March 31, 2008 primarily due to lower average balances of cash, cash equivalents and marketable securities, as a result of operating losses and lower interest rates due to the financial crisis. As a result of the current world-wide financial situation we have invested most of our available cash, cash equivalents and marketable securities in a money market fund containing U.S. Government-backed or collateralized overnight securities.
Cash, cash equivalents and marketable securities decreased by $3.0 million to $7.5 million at March 31, 2009 from $ 10.5 million at December 31, 2008 due primarily to our net loss for the three months ended March 31, 2009.
At March 31, 2009, we had cash, cash equivalents and marketable securities of $7.5 million and working capital of $5.0 million., which we believe will enable us to fund our operations into the fourth quarter of 2009, based on our anticipated spending levels and certain expected positive cash inflows.
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