10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_________________________________________

FORM 10-Q

Mark One
[ X ]	Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.

For the Quarterly Period Ended March 31, 2002

Or

[     ] 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

(Exact Name of Registrant as Specified in its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	33-0361285 (I.R.S. Employer Identification No.)
6455 Nancy Ridge Drive San Diego, CA (Address of Principal Executive Offices)	92121 (Zip Code)

Registrant’s Telephone Number, Including Area Code: (858) 452-6600

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  [X]   No [   ]

The number of shares of the Registrant’s common stock, $.01 par value, outstanding at April 30, 2002 was 42,333,649.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		Balance Sheets
		Statements of Operations
		Statements of Cash Flows
		Notes to Financial Statements
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II. OTHER INFORMATION
	ITEM 2. CHANGES IN SECURITIES
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 10.44

LA JOLLA PHARMACEUTICAL COMPANY
FORM 10-Q
QUARTERLY REPORT

INDEX

PART I. FINANCIAL INFORMATION
	ITEM 1. Financial Statements
	Balance Sheets as of March 31, 2002 (Unaudited) and December 31, 2001	1
	Statements of Operations (Unaudited) for the three months ended March 31, 2002 and 2001	2
	Statements of Cash Flows (Unaudited) for the three months ended March 31, 2002 and 2001	3
	Notes to Financial Statements (Unaudited)	4
	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
	ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	8
PART II. OTHER INFORMATION
	ITEM 6. Exhibits and Reports on Form 8-K	9
SIGNATURES		10

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LA JOLLA PHARMACEUTICAL COMPANY

Balance Sheets
(in thousands)

			March 31,			December 31,
			2002			2001
			(Unaudited)			(Note)
ASSETS
Current assets:
	Cash and cash equivalents		$	70,071		$	9,932
	Short-term investments			16,011			37,028
	Other current assets			802			568
		Total current assets		86,884			47,528
Property and equipment, net				2,527			1,921
Patent costs and other assets, net				2,324			2,237
		Total assets	$	91,735		$	51,686
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	887		$	743
	Accrued clinical expenses			661			703
	Accrued pre-marketing expenses			—			536
	Accrued expenses			737			541
	Accrued payroll and related expenses			667			451
	Current portion of obligations under capital leases			160			167
		Total current liabilities		3,112			3,141
Commitments
Stockholders’ equity:
	Common stock			423			353
	Additional paid-in capital			206,612			158,223
	Other comprehensive income			(48	)		218
	Accumulated deficit			(118,364	)		(110,249	)
		Total stockholders’ equity		88,623			48,545
		Total liabilities and stockholders’ equity	$	91,735		$	51,686

Note: The balance sheet at December 31, 2001 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete balance sheets.

See accompanying notes.

1

LA JOLLA PHARMACEUTICAL COMPANY

Statements of Operations
(Unaudited)
(in thousands, except per share amounts)

			Three Months Ended
			March 31,
			2002			2001
Expenses:
	Research and development		$	7,244		$	6,465
	General and administrative			1,413			884
		Total expenses		8,657			7,349
Loss from operations				(8,657	)		(7,349	)
Interest expense				(6	)		—
Interest income				548			800
Net loss			$	(8,115	)	$	(6,549	)
Basic and diluted net loss per share			$	(.20	)	$	(.20	)
Shares used in computing basic and diluted net loss per share				40,979			32,689

See accompanying notes.

2

LA JOLLA PHARMACEUTICAL COMPANY

Statements of Cash Flows
(Unaudited)
(in thousands)

				Three Months Ended
				March 31,
				2002			2001
Operating activities:
Net loss				$	(8,115	)	$	(6,549	)
Adjustments to reconcile net loss to net cash used for operating activities:
	Depreciation and amortization				262			73
	Accretion of interest income				232			12
	Change in operating assets and liabilities:
		Other current assets			(234	)		185
		Accounts payable and accrued expenses			340			393
		Accrued clinical expenses			(42	)		1,524
		Accrued pre-marketing expenses			(536	)		—
		Accrued payroll and related expenses			216			209
			Net cash used for operating activities		(7,877	)		(4,153	)
Investing activities:
Decrease (increase) in short-term investments					20,519			(1,638	)
Additions to property and equipment					(738	)		(160	)
Increase in patent costs and other assets					(111	)		(189	)
			Net cash provided by (used for) investing activities		19,670			(1,987	)
Financing activities:
Net proceeds from issuance of common stock					48,459			33,218
Payments on obligations under capital leases					(113	)		(22	)
			Net cash provided by financing activities		48,346			33,196
Net increase in cash and cash equivalents					60,139			27,056
Cash and cash equivalents at beginning of period					9,932			8,061
Cash and cash equivalents at end of period				$	70,071		$	35,117
Supplemental disclosure of cash flow information:
Interest paid				$	6		$	—
Supplemental schedule of noncash investing and financing activities:
Capital lease obligations incurred for property and equipment				$	106		$	—
Net unrealized (losses) gains on available-for-sale investments				$	(266	)	$	91

See accompanying notes.

3

LA JOLLA PHARMACEUTICAL COMPANY

Notes to Financial Statements
(Unaudited)

March 31, 2002

1. Basis of Presentation

The accompanying unaudited financial statements of La Jolla Pharmaceutical Company (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for other quarters or the year ended December 31, 2002. For more complete financial information, these financial statements, and the notes thereto, should be read in conjunction with the audited financial statements for the year ended December 31, 2001 included in the Company’s Form 10-K filed with the Securities and Exchange Commission.

2. Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Actual results could differ materially from those estimates.

Net Loss Per Share

Basic and diluted net loss per share is computed using the weighted-average number of common shares outstanding during the periods in accordance with Statement of Financial Accounting Standard No. 128, Earnings per Share. As the Company has incurred a net loss for both periods presented, stock options and warrants are not included in the computation of diluted net loss per share because their effect is anti-dilutive.

Comprehensive Loss

In accordance with Statement of Financial Accounting Standard No. 130, Reporting Comprehensive Income (Loss), unrealized gains and losses on available-for-sale securities are included in other comprehensive income (loss). The Company’s comprehensive net loss totaled $8,381,000 and $6,458,000 for the three-month periods ended March 31, 2002 and 2001, respectively.

3. Changes in Securities

In January 2002, the Company sold 7,000,000 shares of common stock in a private placement to institutional and other accredited investors at a discounted per share value of the common stock on the purchase date with gross proceeds to the Company of approximately $51,590,000.

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4. Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard Nos. 141, Business Combinations (“SFAS 141”) and 142, Goodwill and Other Intangible Assets (“SFAS 142”). SFAS 141 replaces Accounting Principles Board Opinion No. 16, Business Combinations, and eliminates pooling-of-interests accounting prospectively. It also provides guidance on purchase accounting related to the recognition of intangible assets and accounting for negative goodwill. SFAS 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. SFAS 141 and SFAS 142 are effective for all business combinations completed after June 30, 2001. Companies are required to adopt SFAS 142 for fiscal years beginning after December 15, 2001. The adoption of these statements had no impact on our financial statements.

In August 2001, FASB issued Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”). SFAS 144 supersedes the provisions of Accounting Principles Board Opinion No. 30, Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions with regard to discontinued operations and eliminates the provisions of Statement of Financial Accounting Standard No. 121, Accounting for the Impairment of Long-Lived Assets and for Assets to Be Disposed Of, with regard to the requirement to test the allocation of goodwill to long-lived assets for impairment. SFAS 144 provides guidance on differentiating between assets held and used, held for sale, and held for disposal other than by sale (e.g. abandonment, exchange and distribution). SFAS 144 is effective for fiscal years beginning after December 15, 2001. The adoption of this statement had no impact on our financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

     Except for historical statements, this report contains forward-looking statements, involving significant risks and uncertainties, and a number of factors, both foreseen and unforeseen, could cause actual results to differ materially from our current expectations. Our analyses of clinical results of LJP 394, our drug candidate for the treatment of systemic lupus erythematosus (“lupus”), and LJP 1082, our drug candidate for the treatment of antibody-mediated thrombosis (“thrombosis”), are ongoing and future analyses could result in a finding that these drug candidates are not effective in large patient populations, do not provide a meaningful clinical benefit or may reveal a potential safety issue requiring us to develop new candidates. Our blood test to measure the binding affinity for LJP 394 is experimental, has not been validated by independent laboratories, may require regulatory approval and may be necessary for the approval and the commercialization of LJP 394. Our other potential drug candidates are at earlier stages of development and involve comparable risks. Analysis of our clinical trials could have negative or inconclusive results. Any positive results observed to date may not be indicative of future results. Even if results are promising, the U.S. Food and Drug Administration (“FDA”) may require additional clinical trials. The Company’s ability to develop and sell its products in the future may be affected by the intellectual property rights of third parties. Additional risk factors include the uncertainty of: obtaining required regulatory approvals; successfully marketing products; receiving future revenue from product sales or other sources such as collaborative relationships; future profitability; the need for additional financing; our dependence on patents and other proprietary rights; FDA approval of our manufacturing facilities; the increase in capacity of our manufacturing capabilities for possible commercialization; and our lack of marketing experience. Readers are cautioned to not place undue reliance upon forward-looking statements, which speak only as of the date hereof, and we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date hereof. Interested parties are urged to review the risks described in our other reports and registration statements filed with the Securities and Exchange Commission from time to time, including our report on Form 10-K for the year ended December 31, 2001.

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Overview

     Since our inception in May 1989, we have devoted substantially all of our resources to the research and development of technology and potential drugs to treat antibody-mediated diseases. We have never generated any revenue from product sales and have relied upon sales of our equity securities to private and public investors, revenue from collaborative agreements, equipment lease financings and interest income on invested cash balances for our working capital. We have been unprofitable since inception and we expect to incur substantial additional expenses and net operating losses for at least the next several years as we increase our clinical trial and manufacturing activities including the production of LJP 394 and LJP 1082 for clinical trials, and increase our research and development expenditures on additional drug candidates, as well as general and administrative expenditures to support increased clinical trial, manufacturing and research and development activities. Our activities to date are not as broad in depth or scope as the activities we expect to undertake in the future, and our historical operations and the financial information included in this report are not necessarily indicative of our future operating results or financial condition.

     We expect losses to fluctuate from quarter to quarter as a result of differences in the timing of expenses incurred and potential revenues from collaborative arrangements. Some of these fluctuations may be significant. As of March 31, 2002, our accumulated deficit was approximately $118.4 million.

Results of Operations

     For the three months ended March 31, 2002, research and development expenses increased to $7.2 million from $6.5 million for the same period in 2001. The increase was due to an increase in expenses associated with our ongoing Phase III clinical trial of our lupus drug candidate, LJP 394, and the Phase I/II clinical trial of our thrombosis drug candidate, LJP 1082, which was initiated in November 2001.

     Research and development expense of $7.2 million for the three months ended March 31, 2002 consisted of $5.1 million for lupus research and development related expense, $1.4 million for thrombosis research and development related expense and $0.7 million for other research and development related expense. Total lupus research and development expense consisted primarily of investigator fees, clinical research organization fees, salaries and other costs related to research, manufacturing and clinical personnel, clinical lab fees, facilities expense and raw materials for the production of LJP 394 for clinical trials. Total thrombosis research and development expense consisted primarily of salaries for research and development personnel, raw materials for the production of LJP 1082 for clinical trials and facilities expense. Total other research and development expense primarily consisted of salaries for research and development personnel, facilities expense and research supplies.

     Our research and development expenses are expected to increase significantly in the future as clinical trial and manufacturing activities including the production of LJP 394 and LJP 1082 for clinical trials are increased, efforts to develop additional drug candidates are intensified and other potential products progress into and through clinical trials.

     General and administrative expenses increased to $1.4 million for the three months ended March 31, 2002 from $0.9 million for the same period in 2001. The increase was due to additional administrative expenditures to support our increased clinical and research and development activities. We expect general and administrative expenses to increase in the future in order to support increased clinical trial, manufacturing scale-up and research and development activities.

6

     Interest income decreased to $548,000 for the three months ended March 31, 2002 from $800,000 for the same period in 2001. The decrease in interest income was due to lower average interest rates on our investments for the three months ended March 31, 2002 as compared to the three month period ended March 31, 2001.

Liquidity and Capital Resources

     From inception through March 31, 2002, we have incurred a cumulative net loss of approximately $118.4 million and have financed our operations through private and public offerings of our securities, revenues from collaborative agreements, equipment lease financings and interest income on invested cash balances. As of March 31, 2002, we had raised approximately $207.0 million in net proceeds since inception from sales of our equity securities.

     At March 31, 2002, we had $86.1 million in cash, cash equivalents and short-term investments, as compared to $47.0 million at December 31, 2001. Our working capital at March 31, 2002 was $83.8 million, as compared to $44.4 million at December 31, 2001. The increase in cash, cash equivalents and short-term investments and working capital resulted from net proceeds of $48.3 million received by us from the sale of 7,000,000 shares of our common stock to private investors in January 2002. We invest our cash in corporate and United States Government-backed debt instruments.

     As of March 31, 2002, we had acquired an aggregate of $7.1 million in property and equipment, of which approximately $0.3 million of equipment is financed under capital lease obligations. In addition, we lease our office and laboratory facilities and certain equipment under operating leases. We currently have no material commitments for the acquisition of property and equipment. However, we anticipate increasing our investment in property and equipment in connection with the enhancement of our research and development and manufacturing facilities and capabilities.

     We intend to use our financial resources to fund clinical trials and to increase our manufacturing activities, including the production of LJP 394 and LJP 1082 for clinical trials, research and development efforts, and for working capital and other general corporate purposes. The amounts actually expended for each purpose may vary significantly depending upon numerous factors, including the results of clinical trials, the timing of regulatory applications and approvals and technological developments. Expenditures also will depend upon the establishment and progression of collaborative arrangements and contract research as well as the availability of other financings. There can be no assurance that these funds will be available on acceptable terms, if at all.

     We anticipate that our existing capital, including the net proceeds of approximately $48.3 million received by us from the sale of 7,000,000 shares of our common stock to private investors in January 2002 and interest earned thereon, will be sufficient to fund our operations as currently planned, assuming that we do not engage a collaborative partner, into the fourth quarter of 2003. Our future capital requirements will depend on many factors, including continued scientific progress in our research and development programs, the size and complexity of these programs, the scope and results of clinical trials, the analysis of data from the Phase III clinical trial for lupus and Phase I/II clinical trial for thrombosis, the time and costs involved in applying for any regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims, competing technological and market developments, our ability to establish and maintain collaborative relationships and the cost of manufacturing and effective commercialization activities and arrangements. We expect to incur significant net operating losses each year for at least the next several years as we expand our current research and development programs, including clinical trials and manufacturing activities, and increase our general and administrative expenses to support a larger, more complex corporate organization. It is possible that our cash requirements will exceed current projections and that we will therefore need additional financing sooner than currently expected.

     We have no current means of generating cash flow from operations. Our lead drug candidate, LJP 394, will not generate revenues, if at all, until it has been proven safe and effective, has received

7

regulatory approval and has been successfully commercialized. This process is expected to take at least the next several years. Our other drug candidates are much less developed than LJP 394. There can be no assurance that our product development efforts with respect to LJP 394 or any other drug candidate will be successfully completed, that required regulatory approvals will be obtained or that any product, if introduced, will be successfully marketed or achieve commercial acceptance. Accordingly, we must continue to rely upon outside sources of financing to meet our capital needs for the foreseeable future.

     We will continue to seek capital through any appropriate means, including issuance of our securities and establishment of collaborative arrangements. However, there can be no assurance that additional financing will be available on acceptable terms and our negotiating position in capital-raising efforts may worsen as we continue to use existing resources. There is no assurance that we will be able to enter into collaborative relationships.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We do not utilize derivative financial instruments, derivative commodity instruments or other market-risk-sensitive instruments, positions or transactions in any material fashion. We are not subject to any material risks arising from changes in foreign currency exchange rates or commodity prices. We invest a portion of our excess cash in interest bearing investment-grade securities. The investment-grade securities we hold are subject to changes in the financial standing of the issuer of such securities. Due to their short term nature, however, we generally hold such investment-grade securities to their maturity date and therefore realize their face value. The balance of our cash equivalents are on deposit in money market funds and we do not expect fluctuations in interest rates to materially affect our financial results.

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PART II.     OTHER INFORMATION

ITEM 2.     CHANGES IN SECURITIES

     In January 2002, we sold 7,000,000 shares of our common stock to private investors for an aggregate price of $51.6 million. The sale was a privately negotiated sale to institutional and other accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933. The shares were sold without registration under the Securities Act of 1933 in reliance on Rule 506. The sale was made for the purpose of financing working capital. We filed a registration statement covering the resale of these shares on Form S-3 that became effective on February 4, 2002.

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit
Number	Description
3.1	Intentionally omitted
3.2	Amended and Restated Bylaws of the Company (1)
3.3	Amended and Restated Certificate of Incorporation of the Company (2)
4.0	Rights Agreement dated as of December 3, 1998 between the Company and American Stock Transfer & Trust Company (3)
4.1	Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of the Company (4)
4.2	Amendment to Rights Agreement, effective as of July 21, 2000, between the Company and American Stock Transfer & Trust Company (5)
10.44	Supplement to employment offer letter for Bruce K. Bennett, Jr.*

*	This exhibit is a management contract or compensatory plan or arrangement.
(1)	Previously filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 and incorporated by reference herein.
(2)	Previously filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated by reference herein.
(3)	Previously filed with the Company’s Registration Statement on Form 8-A (No. 000-24274) as filed with the Securities and Exchange Commission on December 4, 1998.
(4)	Previously filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated by reference herein.
(5)	Previously filed with the Company’s Current Report on Form 8-K filed on 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.

(b)	Reports on Form 8-K
	None.

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	La Jolla Pharmaceutical Company
Date: May 14, 2002	By:	/s/ Steven B. Engle
		Steven B. Engle Chairman and Chief Executive Officer On behalf of the Registrant

By:	/s/ Gail A. Sloan
	Gail A. Sloan Secretary and Controller As Principal Financial and Accounting Officer

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LA JOLLA PHARMACEUTICAL COMPANY

INDEX TO EXHIBITS

Exhibit
Number	Description
10.44	Supplement to employment offer letter for Bruce K. Bennett, Jr.

EX-10.44 3 a81585ex10-44.txt EXHIBIT 10.44 LA JOLLA PHARMACEUTICAL COMPANY EXHIBIT 10.44 ATTACHMENT A As a supplement to the letter agreement dated December 28, 2001 between La Jolla Pharmaceutical Company ("LJP") and Bruce K. Bennett, Jr. ("BENNETT") related to Bennett's employment by LJP, Bennett and LJP hereby agree as follows: In connection with Bennett's employment with LJP, LJP's management will recommend to LJP's Board of Directors that LJP grant to Bennett an option to purchase up to 40,000 shares of common stock of LJP. Such option, if granted, shall be the "OPTION" for purposes hereof. If Bennett's employment is terminated by LJP without cause (as defined below), or if a Change in Control of LJP (as defined below) occurs and Bennett's employment with LJP or its successor "terminates in connection with" (as defined below) that Change in Control and in the absence of any event or circumstance constituting Cause, then: (i) Bennett will be entitled to receive from LJP a severance payment equal to his then-current base salary for a period of six full calendar months from the date of termination and an additional three full calendar months if and when after the first six months he has not found suitable employment, payable consistent with LJP's normal payroll practices, provided that such payment will be contingent upon execution and delivery by Bennett and LJP of a mutual release, in form satisfactory to LJP, of all claims arising in connection with Bennett's employment with LJP and termination thereof, and (ii) Bennett will be entitled to receive for a period of six full calendar months from the date of termination and an additional three full calendar months if and when after the first six months he has not found suitable employment, medical and dental benefits coverage for Bennett and/or his dependents through the Company's available plans at the time and LJP will be responsible to continue payment of all applicable deductions for premium costs. After the Company's obligation to pay the premiums for health and dental coverage Bennett and/or his dependents will be eligible to continue plan participation under COBRA. (iii) Notwithstanding anything to the contrary in the option plan (the "PLAN") pursuant to which all of Bennett's existing options were granted, the Options shall automatically vest and become fully exercisable as of the date of termination of Executive's employment (the "TERMINATION DATE"), notwithstanding any vesting or performance conditions applicable thereto, and shall remain exercisable for a period of one year following the Termination Date or such longer period as is provided by the Plan or grant pursuant to which the Options were granted. However, notwithstanding the foregoing, in no case will the Options be exercisable beyond the duration of the original term thereof, and if the Options qualify as an incentive stock option under the Internal Revenue Code and applicable regulations thereunder, the exercise period thereof shall not be extended in such a manner as to cause the Options to cease to qualify as an incentive stock option unless Executive elects to forego incentive stock option treatment and extend the exercise period thereof as provided herein. For purposes hereof, "CHANGE IN CONTROL" of LJP has the meaning set forth in the Plan in its form as the date of grant of the Options. 1 For purposes hereof, "CAUSE" means Bennett has (i) engaged in serious criminal activity or other wrongful conduct that has an adverse impact on LJP, (ii) disregarded instructions given to him under the authority of LJP's Board of Directors, (iii) performed services for any person or entity other than LJP and appropriate civic organizations, or (iv) otherwise materially breached his employment or fiduciary responsibilities to LJP. For purposes hereof, Bennett's employment with LJP or its successor will be deemed to "TERMINATE IN CONNECTION WITH" a Change in Control if, within 180 days after the consummation of the Change of Control, (i) Bennett is removed from Bennett's employment by, or resigns his employment upon the request of, a person exercising practical voting control over LJP or its successor following the Change in Control or a person acting upon authority or at the instruction of such person; or (ii) Bennett's position is eliminated as a result of a reduction in force made to reduce over-capacity or unnecessary duplication of personnel and Bennett is not offered a replacement position with LJP or its successor as a Vice President with compensation and functional duties substantially similar to the compensation and duties in effect immediately before the Change in Control; or (iii) Bennett resigns his employment with the Company or its successor rather than comply with a relocation of his primary work site more than 50 miles from LJP's headquarters. In Witness Whereof, LJP and Bennett have entered into this agreement as of January 11, 2002. La Jolla Pharmaceutical Company By: /s/ Steven B. Engle /s/ Bruce K. Bennett, Jr. ---------------------------------- ---------------------------------- Steven B. Engle Bruce K. Bennett, Jr. Chairman & CEO Vice President of Manufacturing 2 -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.44

                         LA JOLLA PHARMACEUTICAL COMPANY
                                  EXHIBIT 10.44

                                  ATTACHMENT A

        As a supplement to the letter agreement dated December 28, 2001 between
La Jolla Pharmaceutical Company ("LJP") and Bruce K. Bennett, Jr. ("BENNETT")
related to Bennett's employment by LJP, Bennett and LJP hereby agree as follows:

        In connection with Bennett's employment with LJP, LJP's management will
recommend to LJP's Board of Directors that LJP grant to Bennett an option to
purchase up to 40,000 shares of common stock of LJP. Such option, if granted,
shall be the "OPTION" for purposes hereof.

        If Bennett's employment is terminated by LJP without cause (as defined
below), or if a Change in Control of LJP (as defined below) occurs and Bennett's
employment with LJP or its successor "terminates in connection with" (as defined
below) that Change in Control and in the absence of any event or circumstance
constituting Cause, then:

                (i)     Bennett will be entitled to receive from LJP a severance
                        payment equal to his then-current base salary for a
                        period of six full calendar months from the date of
                        termination and an additional three full calendar months
                        if and when after the first six months he has not found
                        suitable employment, payable consistent with LJP's
                        normal payroll practices, provided that such payment
                        will be contingent upon execution and delivery by
                        Bennett and LJP of a mutual release, in form
                        satisfactory to LJP, of all claims arising in connection
                        with Bennett's employment with LJP and termination
                        thereof, and

                (ii)    Bennett will be entitled to receive for a period of six
                        full calendar months from the date of termination and an
                        additional three full calendar months if and when after
                        the first six months he has not found suitable
                        employment, medical and dental benefits coverage for
                        Bennett and/or his dependents through the Company's
                        available plans at the time and LJP will be responsible
                        to continue payment of all applicable deductions for
                        premium costs. After the Company's obligation to pay the
                        premiums for health and dental coverage Bennett and/or
                        his dependents will be eligible to continue plan
                        participation under COBRA.

                (iii)   Notwithstanding anything to the contrary in the option
                        plan (the "PLAN") pursuant to which all of Bennett's
                        existing options were granted, the Options shall
                        automatically vest and become fully exercisable as of
                        the date of termination of Executive's employment (the
                        "TERMINATION DATE"), notwithstanding any vesting or
                        performance conditions applicable thereto, and shall
                        remain exercisable for a period of one year following
                        the Termination Date or such longer period as is
                        provided by the Plan or grant pursuant to which the
                        Options were granted. However, notwithstanding the
                        foregoing, in no case will the Options be exercisable
                        beyond the duration of the original term thereof, and if
                        the Options qualify as an incentive stock option under
                        the Internal Revenue Code and applicable regulations
                        thereunder, the exercise period thereof shall not be
                        extended in such a manner as to cause the Options to
                        cease to qualify as an incentive stock option unless
                        Executive elects to forego incentive stock option
                        treatment and extend the exercise period thereof as
                        provided herein.

        For purposes hereof, "CHANGE IN CONTROL" of LJP has the meaning set
        forth in the Plan in its form as the date of grant of the Options.




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        For purposes hereof, "CAUSE" means Bennett has (i) engaged in serious
        criminal activity or other wrongful conduct that has an adverse impact
        on LJP, (ii) disregarded instructions given to him under the authority
        of LJP's Board of Directors, (iii) performed services for any person or
        entity other than LJP and appropriate civic organizations, or (iv)
        otherwise materially breached his employment or fiduciary
        responsibilities to LJP.

        For purposes hereof, Bennett's employment with LJP or its successor will
        be deemed to "TERMINATE IN CONNECTION WITH" a Change in Control if,
        within 180 days after the consummation of the Change of Control, (i)
        Bennett is removed from Bennett's employment by, or resigns his
        employment upon the request of, a person exercising practical voting
        control over LJP or its successor following the Change in Control or a
        person acting upon authority or at the instruction of such person; or
        (ii) Bennett's position is eliminated as a result of a reduction in
        force made to reduce over-capacity or unnecessary duplication of
        personnel and Bennett is not offered a replacement position with LJP or
        its successor as a Vice President with compensation and functional
        duties substantially similar to the compensation and duties in effect
        immediately before the Change in Control; or (iii) Bennett resigns his
        employment with the Company or its successor rather than comply with a
        relocation of his primary work site more than 50 miles from LJP's
        headquarters.

                In Witness Whereof, LJP and Bennett have entered into this
        agreement as of January 11, 2002.



La Jolla Pharmaceutical Company

  By: /s/ Steven B. Engle                    /s/ Bruce K. Bennett, Jr.
     ----------------------------------      ----------------------------------
          Steven B. Engle                        Bruce K. Bennett, Jr.
          Chairman & CEO                         Vice President of Manufacturing




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