10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION      

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 March 31, 2004

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

(Exact Name of Registrant as Specified in Its Charter)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

The number of shares of the registrant’s common stock, $0.01 par value per share, outstanding at May 5, 2004 was 61,211,122.

LA JOLLA PHARMACEUTICAL COMPANY
FORM 10-Q
QUARTERLY REPORT

INDEX

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheets as of March 31, 2004 (Unaudited) and December 31, 2003	1
Statements of Operations (Unaudited) for the three months ended March 31, 2004 and 2003	2
Statements of Cash Flows (Unaudited) for the three months ended March 31, 2004 and 2003	3
Notes to Financial Statements (Unaudited)	4
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	10
ITEM 4. Controls and Procedures	10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K	11
SIGNATURES	16
EXHIBIT 10.53
EXHIBIT 10.54
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LA JOLLA PHARMACEUTICAL COMPANY
Balance Sheets
(in thousands)

	March 31,			December 31,
	2004			2003
	(Unaudited)			(See Note)
ASSETS
Current assets:
Cash and cash equivalents	$	5,140		$	4,021
Short-term investments		48,557			28,112
Other current assets		1,277			957
Total current assets		54,974			33,090
Property and equipment, net		6,040			6,206
Patent costs and other assets, net		2,720			2,648
Total assets	$	63,734		$	41,944
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,453		$	278
Accrued clinical/regulatory expenses		238			524
Accrued expenses		1,162			865
Accrued payroll and related expenses		1,178			1,692
Current portion of obligations under capital leases		56			66
Current portion of notes payable		815			751
Total current liabilities		4,902			4,176
Noncurrent portion of obligations under capital leases		14			29
Noncurrent portion of notes payable		1,233			1,312
Commitments
Stockholders’ equity:
Common stock		612			511
Additional paid-in capital		257,794			228,394
Other comprehensive (loss) income		(41	)		(73	)
Accumulated deficit		(200,780	)		(192,405	)
Total stockholders’ equity		57,585			36,427
Total liabilities and stockholders’ equity	$	63,734		$	41,944

Note: The balance sheet at December 31, 2003 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.

See accompanying notes.

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LA JOLLA PHARMACEUTICAL COMPANY

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

	Three Months Ended
	March 31,
	2004			2003
Expenses:
Research and development	$	6,801		$	11,920
General and administrative		1,518			1,801
Total expenses		8,319			13,721
Loss from operations		(8,319	)		(13,721	)
Interest (expense) income, net		(56	)		180
Net loss	$	(8,375	)	$	(13,541	)
Basic and diluted net loss per share	$	(0.15	)	$	(0.32	)
Shares used in computing basic and diluted net loss per share		54,747			42,480

     See accompanying notes.

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LA JOLLA PHARMACEUTICAL COMPANY

Statements of Cash Flows
(Unaudited)
(in thousands)

	Three Months Ended
	March 31,
	2004			2003
Operating activities:
Net loss	$	(8,375	)	$	(13,541	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization		493			518
Accretion of interest income		(75	)		2
Write-off of patents		59			—
Change in operating assets and liabilities:
Other current assets		(320	)		(622	)
Accounts payable and accrued expenses		1,472			1,389
Accrued clinical/regulatory expenses		(286	)		(345	)
Accrued payroll and related expenses		(514	)		(272	)
Net cash used for operating activities		(7,546	)		(12,871	)
Investing activities:
Purchases of short-term investments		(26,718	)		(13,310	)
Sales of short-term investments		6,380			26,223
Maturities of short-term investments		—			3,530
Additions to property and equipment		(298	)		(991	)
Increase in patent costs and other assets		(160	)		(151	)
Net cash (used for) provided by investing activities		(20,796	)		15,301
Financing activities:
Net proceeds from issuance of common stock		29,501			101
Payments on obligations under capital leases		(25	)		(37	)
Proceeds from issuance of notes payable		189			—
Payments on notes payable		(204	)		(109	)
Net cash provided by (used for) financing activities		29,461			(45	)
Net increase in cash and cash equivalents		1,119			2,385
Cash and cash equivalents at beginning of period		4,021			5,610
Cash and cash equivalents at end of period	$	5,140		$	7,995
Supplemental disclosure of cash flow information:
Interest paid	$	49		$	43
Supplemental schedule of noncash investing and financing activities:
Capital lease obligations incurred for property and equipment	$	—		$	59
Net unrealized losses on available-for-sale investments	$	32		$	(10	)

     See accompanying notes.

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LA JOLLA PHARMACEUTICAL COMPANY

Notes to Financial Statements
(Unaudited)

March 31, 2004

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, 2004 are not necessarily indicative of the results that may be expected for other quarters or the year ended December 31, 2004. 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, 2003 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.

Reclassification

Certain amounts in the 2003 financial statements have been reclassified to conform to the 2004 presentation.

Stock-Based Compensation

As allowed under Statement of Financial Accounting Standard No. 123, Accounting and Disclosure of Stock-Based Compensation (“SFAS 123”), the Company has elected to continue to account for stock option grants in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related interpretations. The Company generally grants stock options for a fixed number of shares to employees and directors with an exercise price equal to the fair value of the shares at the date of grant. Therefore, under APB 25, the Company recognizes no compensation expense for such stock option grants.

Pro forma information regarding net loss and net loss per share is required by SFAS 123. SFAS 123 requires that the information be determined as if the Company has accounted for its equity incentive plans granted after December 31, 1994 under the fair value method prescribed by SFAS 123. The fair value of the options granted was estimated at the date of grant using a Black-Scholes option pricing model.

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For purposes of pro forma disclosures, the estimated fair value of the options is expensed over the options’ vesting period. The Company’s pro forma information follows (in thousands except for net loss per share information):

	Three Months Ended March 31,
	2004			2003
Net loss as reported	$	(8,375	)	$	(13,541	)
Less: Stock-based compensation expense determined under fair value based method for all awards		(1,654	)		(1,664	)
Pro forma net loss	$	(10,029	)	$	(15,205	)
Basic and diluted net loss per share as reported	$	(0.15	)	$	(0.32	)
Pro forma basic and diluted net loss per share	$	(0.18	)	$	(0.36	)

The effects of applying SFAS 123 for either recognizing compensation expense or providing pro forma disclosures may not be representative of the effects on reported net loss for future quarters or years.

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. Because the Company has incurred a net loss for all periods presented in the Statements of Operations, stock options 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 $8,343,000 and $13,551,000 for the three-month periods ended March 31, 2004 and 2003, respectively.

3. Recently Issued Accounting Standards

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of Accounting and Research Bulletin No. 51 (“FIN 46”). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. In December 2003, FASB issued FIN 46R, a revision to FIN 46. FIN 46R provides a broad deferral of the latest date by which all public entities must apply FIN 46 to certain variable interest entities to the first reporting period ending after March 15, 2004. The adoption of FIN 46 had no impact on the Company’s financial statements.

In December 2003, FASB issued a revision to Statement of Financial Accounting Standard No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits—an amendment of FASB Statements No. 87, 88, and 106 (“SFAS 132”). SFAS 132 revises employers’ disclosures about pension plans and other postretirement benefit plans. It does not change the measurement or recognition of those plans required by FASB Statements No. 87, Employers’ Accounting for Pensions, No. 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions. The revised Statement retains the disclosure requirements contained in FASB Statement No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits, which it replaces. It requires additional disclosures to those in the original Statement 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. SFAS 132 is effective for fiscal years ending after December 15, 2003. The adoption of SFAS 132 had

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no impact on the Company’s financial statements.

In March 2004, the FASB issued an exposure document entitled Share-Based Payment — an amendment of Statements No. 123 and 95 (Proposed Statement of Financial Accounting Standards). The proposed Statement would eliminate an issuer’s ability to account for share-based compensation transactions using APB Opinion No. 25 and would generally require that such transactions be accounted for using a fair-value-based method of accounting. This accounting standard, if approved, will result in significant compensation expense charges to our future results of operations. The proposed Statement, if adopted, would be applied to public entities prospectively for fiscal years beginning after December 15, 2004, as if all share-based compensation awards granted, modified or settled after December 15, 1994 had been accounted for using the fair-value method of accounting. Retrospective application of the proposed Statement is not permitted.

4. Notes Payable

The Company entered into a note payable for $189,000 in March 2004 to finance certain purchases of property and equipment. The note is secured by the financed property and equipment, bears interest at 8.27% per annum and is payable in monthly installments of principal and interest of approximately $5,000 for the first 36 months and $4,000 for the remaining six months.

5. Restructuring Charges

In May 2003, the Company restructured its operations in order to reduce expenses and focus its resources on the further development of Riquent®. In accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, as of December 31, 2003, the Company recorded total restructuring charges of approximately $490,000 in connection with the termination of 24 employees of which approximately $305,000 of the total restructuring charges was included in research and development expense and approximately $185,000 was included in general and administrative expense. The restructuring plan was completed in February 2004 and actual total charges paid were approximately $490,000.

6. Changes in Securities

In February and March 2004, the Company sold an aggregate of 10,000,000 shares of common stock in a public offering for net proceeds to the Company of approximately $29,366,000.

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

Forward-Looking Statements

     This report contains forward-looking statements, including, without limitation, those dealing with La Jolla Pharmaceutical Company’s drug development plans and clinical trials. The forward-looking statements in this report involve significant risks and uncertainties, and a number of factors, both foreseen and unforeseen, could cause actual results to differ materially from our current expectations. Forward-looking statements include those that express a plan, belief, expectation, estimation, anticipation, intent, contingency, future development or similar expression. Although our New Drug Application (“NDA”) for Riquent® has been accepted by the United States Food and Drug Administration (the “FDA”) for review, there is no guarantee that the FDA will approve Riquent in a timely manner, or at all. Our analyses of clinical results of Riquent, previously known as 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 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. The analysis of the data from our Phase 3 trial of Riquent showed that the trial did not reach statistical significance with respect to its primary endpoint, time to renal flare, or to the secondary endpoint, time to treatment with high-dose corticosteroids or cyclophosphamide. Although our NDA for Riquent has been accepted for review by the

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FDA, the results from our clinical trials of Riquent may not ultimately be sufficient to obtain regulatory clearance to market Riquent either in the United States or Europe, and we may be required to conduct additional clinical studies to demonstrate the safety and efficacy of Riquent in order to obtain marketing approval. There is no guarantee, however, that we will have the necessary resources to complete any additional trial, that we will elect to conduct an additional trial, or that any additional trial will sufficiently demonstrate the safety and efficacy of Riquent. Our blood test to measure the binding affinity for Riquent is experimental, has not been validated by independent laboratories and will likely be reviewed as part of the Riquent approval process. 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. In any event, regulatory authorities may require additional clinical trials, or may not approve our drugs. Our ability to develop and sell our products in the future may be adversely affected by the intellectual property rights of third parties. Additional risk factors include the uncertainty and timing of: obtaining required regulatory approvals, including delays associated with any approvals that we may obtain; the clear need for additional financing; our ability to pass FDA pre-approval inspections of our manufacturing facilities and processes; the increase in capacity of our manufacturing capabilities for possible commercialization; successfully marketing and selling our products; our lack of manufacturing, marketing and sales experience; our ability to make use of the orphan drug designation for Riquent; generating future revenue from product sales or other sources such as collaborative relationships; future profitability; and our dependence on patents and other proprietary rights. 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 Annual Report on Form 10-K for the year ended December 31, 2003, and in other reports and registration statements that we file with the Securities and Exchange Commission from time to time.

Recent Developments

     On February 16, 2004, we announced that our NDA for Riquent had been accepted for review by the FDA. The acceptance of the NDA by the FDA indicates that the NDA is sufficiently complete to permit a substantive review of the application. Further discussions with the FDA will be needed to clarify whether any additional supportive information or studies will be required to support the approval of the NDA. The FDA will determine whether to approve Riquent, either on the basis of our clinical trial results or under Subpart H, and the conditions of any approval, after it has completed its review of our NDA. Under Subpart H, drugs in development for serious, life-threatening diseases with an unmet medical need can be approved on an accelerated basis if the FDA determines that the effect of the drug on a surrogate endpoint is reasonably likely to predict clinical benefit and that a post-marketing clinical trial can be successfully completed following drug approval which confirms the clinical benefit. As previously announced, in our Phase 3 and Phase 2/3 trials, patients treated with Riquent had significantly reduced levels of antibodies to dsDNA compared with patients treated with placebo. We believe that data from our clinical trials and the relevant medical literature would support the use of the reduction in the level of antibodies to dsDNA as a surrogate endpoint that would be reasonably likely to predict clinical benefit. We are currently in discussions with the FDA about the design and timing of a post-marketing clinical trial that would be required if Subpart H approval is pursued. We also are currently meeting with European regulatory authorities to discuss potential next steps for Riquent in Europe. There can be no guarantee that future meetings with the FDA and other regulatory agencies can be held in a timely manner, or at all, or that our meetings with them will result in our being able to continue to develop Riquent. If for any reason our development efforts as to Riquent are terminated, it would have a material adverse effect on our business and future prospects.

     On February 26, 2004, we announced that we had completed a public offering of 8,695,653 shares of our common stock. The net proceeds that we received from the offering, after expenses, were approximately $25.5 million.

     On March 5, 2004, we announced that the underwriter for the February 2004 public offering purchased an additional 1,304,347 shares at the initial offering price per share pursuant to the over-allotment option granted to the underwriter in connection with the offering. The net proceeds that we received from the sale of the over-allotment shares, after expenses, were approximately $3.9 million.

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     On March 11, 2004, we announced additional analyses of data from our Phase 3 and Phase 2/3 trials of Riquent. The data showed that, after one year of treatment, the number of lupus patients with a reduction in proteinuria of at least 50% from baseline was greater in the Riquent-treated group than in the placebo-treated group.

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 private and public offerings of securities, revenue from collaborative agreements, equipment financings and interest income on invested cash balances for our working capital. Depending upon the outcome of the FDA’s review of our NDA, our discussions with the FDA and other regulatory agencies and our continuing analysis of the data from our clinical trials of Riquent, our research and development expenses may increase significantly in the future if we are required to conduct additional studies to demonstrate the safety and efficacy of Riquent or if we increase our commercialization activities for Riquent. Our research and development expenses may also increase if we increase our activities related to the development of LJP 1082 or additional drug candidates. Our activities to date are not as broad in depth or scope as the activities we may 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 our net loss to fluctuate from quarter to quarter as a result of the timing of expenses incurred and revenues earned from any potential collaborative arrangements we may establish. Some of these fluctuations may be significant. As of March 31, 2004, our accumulated deficit was approximately $200.8 million.

     Our business is subject to significant risks, including, but not limited to, the risks inherent in research and development efforts, including clinical trials, uncertainties associated with both obtaining and enforcing patents, the potential enforcement of the patent rights of others, the lengthy, expensive and uncertain process of seeking regulatory approvals, uncertainties regarding government reforms regarding product pricing and reimbursement levels, technological change, competition, manufacturing uncertainties, our lack of marketing experience, the uncertainty of receiving future revenue from product sales or other sources such as collaborative relationships, the uncertainty of future profitability and the clear need for additional financing. Even if our product candidates appear promising at an early stage of development, they may not reach the market for numerous reasons, including the possibilities that the products will be ineffective or unsafe during clinical trials, will fail to receive necessary regulatory approvals, will be difficult to manufacture on a large scale, will be uneconomical to market or will be precluded from commercialization by the proprietary rights of third parties or competing products.

Results of Operations

     For the three months ended March 31, 2004, research and development expenses decreased to $6.8 million from $11.9 million for the same period in 2003 primarily due to a decrease in expenses related to our open-label follow-on clinical trial of Riquent which was closed in April 2003, a decrease in expenses related to the unblinding and analysis of the data from our Phase 3 trial of Riquent in the first quarter of 2003 and a decrease in personnel costs related to the termination of 19 research and development positions as part of the organizational restructuring that occurred in May 2003.

     Research and development expense of $6.8 million for the three months ended March 31, 2004 consisted of $5.7 million for lupus research and development related expense, $0.4 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 salaries and other costs related to research, manufacturing and clinical personnel, raw materials for the production of Riquent, manufacturing supplies and fees for consulting and outside services. Total thrombosis related research and development expense consisted primarily of salaries for research and development personnel and research supplies. Total other research and development expense consisted primarily of salaries for research and development personnel, research supplies and fees for consulting services.

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     Our research and development expenses may increase significantly in the future if we are required or initiate an additional clinical trial of Riquent, initiate commercialization activities for Riquent, increase our development activities related to LJP 1082, or increase our development of additional drug candidates.

     General and administrative expense decreased to $1.5 million for the three months ended March 31, 2004 from $1.8 million for the same period in 2003 primarily due to a decrease in consulting fees for pre-marketing activities and a decrease in personnel costs related to the termination of 5 administrative positions as part of the organizational restructuring that occurred in May 2003. General and administrative expense may increase in the future to support possible increases in commercialization, clinical trial, manufacturing and research and development activities.

     Interest (expense) income, net decreased to $(0.1) million for the three months ended March 31, 2004 from $0.2 million for the same period in 2003 due to lower average investment balances, lower average interest rates on our investments, an increase in our notes payable obligations and realized losses on the sale of investments.

Liquidity and Capital Resources

     From inception through March 31, 2004, we have incurred a cumulative net loss of approximately $200.8 million and have financed our operations through private and public offerings of securities, revenues from collaborative agreements, equipment financings, and interest income on invested cash balances. From inception through March 31, 2004, we raised approximately $257.6 million in net proceeds from sales of equity securities.

     At March 31, 2004, we had $53.7 million in cash, cash equivalents and short-term investments, as compared to $32.1 million at December 31, 2003. Our working capital at March 31, 2004 was $50.1 million, as compared to $28.9 million at December 31, 2003. The increase in cash, cash equivalents and short-term investments resulted from our receipt of net proceeds of $29.4 million from the recent sale of 10.0 million shares of our common stock, partially offset by the use of our financial resources to fund our manufacturing activities, research and development efforts and for other general corporate purposes. We invest our cash in corporate and United States government-backed debt instruments. As of March 31, 2004, we classified all of our investments as available-for-sale securities because we expect to sell them in order to support our current operations regardless of their maturity dates. As of March 31, 2004, available-for-sale securities of $27.5 million have stated maturity dates of one year or less and $24.3 million have maturity dates after one year.

     As of March 31, 2004, we had acquired an aggregate of $13.6 million in property and equipment, of which approximately $0.1 million and $3.2 million of equipment is financed under capital lease and notes payable obligations, respectively. In addition, we lease our office and laboratory facilities and certain equipment under operating leases. We have also entered into a $1.4 million purchase commitment with a potential third party manufacturer of materials for Riquent. The purpose of the agreement is to qualify the manufacturer as a manufacturer that we could use in the commercial production of Riquent if we obtain regulatory approval. The agreement includes a cancellation fee of $0.4 million. We intend to use our current financial resources to fund our obligation under this purchase commitment. In the future, we may have additional increases to our investments in property and equipment if we expand our research and development and manufacturing facilities and capabilities.

     Other than the addition of a note payable obligation for $189,000 to finance certain purchases of property and equipment, there have been no material changes during the first quarter of 2004, outside the ordinary course of business, in the specified contractual obligations presented in our latest annual report.

     We intend to use our financial resources to fund our research and development efforts, to fund possible further clinical trials, manufacturing and commercialization activities of Riquent, 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 timing of any regulatory applications and approvals, the outcome of our meetings with regulatory authorities, the continued analysis of the clinical

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trial data of Riquent, results from future clinical trials, and technological developments. Expenditures also will depend upon any establishment and progress of collaborative arrangements and contract research as well as the availability of other funding or financings. There can be no assurance that future funds will be available on acceptable terms, if at all.

     We anticipate that our existing cash and cash investments and interest earned thereon will be sufficient to fund our operations as currently planned into the second quarter of 2005, assuming that we do not engage in any significant clinical trial or commercialization activities and further assuming that we do not enter into an agreement with a collaborative partner or engage in any other financing activities. Our future capital requirements will depend upon a number of factors, including the FDA’s review of our NDA for Riquent, the outcome of meetings with regulatory authorities, the time and costs involved in applying for any regulatory approvals, the continued analysis of data from our clinical trials of Riquent and the Phase 1/2 clinical trial of LJP 1082, the scope and results of future clinical trials, continued scientific progress in our research and development programs, the size and complexity of these programs, the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims, competing technological and market developments, our ability to establish and maintain future collaborative relationships, and the cost of possible manufacturing and commercialization activities. We expect to incur significant net operating losses each year for at least the next several years as we continue our current research and development efforts, including possible additional clinical trials, manufacturing and commercialization activities of Riquent, and incur general and administrative expenses to support these efforts. It is possible that our cash requirements will exceed our current projections and that we will therefore need additional financing sooner than currently expected.

     We currently have no means of generating cash flow from operations. Our lead drug candidate, Riquent, will not generate revenues, if at all, until it has received regulatory approval and has been successfully manufactured, marketed and sold. This process, if completed, could take a significant amount of time. Our other drug candidates are much less developed than Riquent. There can be no assurance that our product development efforts with respect to Riquent 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 on outside sources of financing to meet our capital needs for the foreseeable future.

     We will continue to seek capital through 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, if it all, and our negotiating position in capital-raising efforts may worsen as we continue to use existing resources or if the development of Riquent is delayed or terminated. There is also no assurance that we will be able to enter into future collaborative relationships.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We invest our excess cash in interest-bearing investment-grade securities which we sell from time to time to support our current operations. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions in any material fashion. Although the investment-grade securities which we hold are subject to changes in the financial standing of the issuer of such securities, we do not believe that we are subject to any material risks arising from the maturity dates of the debt instruments or changes in interest rates because the interest rates of the securities in which we invest that have a maturity date greater than one year are reset periodically within time periods not exceeding 49 days. We currently do not invest in any securities that are materially and directly affected by foreign currency exchange rates or commodity prices.

ITEM 4.  CONTROLS AND PROCEDURES

(a) As of the end of the period covered by this quarterly report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

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Based upon that evaluation, our principal executive officer and principal financial officer have concluded that these disclosure controls and procedures are effective in timely alerting them to material information relating to La Jolla Pharmaceutical Company required to be included in our periodic SEC filings.

(b) There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.         OTHER INFORMATION

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit
Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Company (1)
3.2	Amended and Restated Bylaws of the Company (2)
4.1	Rights Agreement dated as of December 3, 1998 between the Company and American Stock Transfer & Trust Company (3)
4.2	Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of the Company (4)
4.3	Amendment to Rights Agreement, effective as of July 21, 2001, between the Company and American Stock Transfer & Trust Company (5)
10.1	Stock Option Agreement dated February 4, 1993 entitling Joseph Stemler to purchase 35,000 shares of Common Stock (6)*
10.2	Steven B. Engle Employment Agreement (6)*
10.3	Amendment No. 1 to Steven B. Engle Employment Agreement (7)*
10.4	Amendment No. 2 to Steven B. Engle Employment Agreement (1)*
10.5	Amendment No. 3 to Steven B. Engle Employment Agreement (23)*
10.6	Form of Directors and Officers Indemnification Agreement (6)
10.7	Option and Collaborative Research Agreement, dated June 10, 1991, regarding certain compounds for potential treatment of muscular dystrophies or myasthenia gravis between the Company and CepTor Corporation (6)
10.8	Form of Employee Invention and Confidential Information Agreement (6)
10.9	Industrial Real Estate Lease (6)
10.10	La Jolla Pharmaceutical Company 1989 Incentive Stock Option Plan and 1989 Nonstatutory Stock Option Plan (6) *
10.11	Form of Stock Option Agreement under the 1989 Nonstatutory Stock Option Plan (6)*
10.12	La Jolla Pharmaceutical Company 1994 Stock Incentive Plan (Amended and Restated as of May 16, 2003) (23)*

11

Exhibit
Number	Description
10.13	La Jolla Pharmaceutical Company 1995 Employee Stock Purchase Plan (Amended and Restated as of May 22, 2002) (8)*
10.14	Letter of Agreement, dated June 7, 1993, between the Company and Vector Securities International regarding Vector’s engagement as financial advisor to the Company with respect to potential corporate strategic alliances (6)
10.15	Second Amendment to Lease, dated June 30, 1994, by and between the Company and BRE Properties, Inc. (9)
10.16	Third Amendment to Lease, dated January 26, 1995, by and between the Company and BRE Properties, Inc. (10)
10.17	Master Lease Agreement, dated September 13, 1995, by and between the Company and Comdisco Electronics Group (11)
10.18	Agreement, dated September 22, 1995, between the Company and Joseph Stemler regarding option vesting (12) *
10.19	Building Lease Agreement, effective November 1, 1996, by and between the Company and WCB II-S BRD Limited Partnership (13)
10.20	Master Lease Agreement, dated December 20, 1996, by and between the Company and Transamerica Business Credit Corporation (14)
10.21	License and Supply Agreement, dated December 23, 1996, by and between the Company and Abbott Laboratories (14) (15)
10.22	Stock Purchase Agreement, dated December 23, 1996, by and between the Company and Abbott Laboratories (14)
10.23	Waiver of Contractual Restrictions dated February 6, 2001 (16)
10.24	Master Lease Agreement No. 2, dated June 23, 1998, by and between the Company and Transamerica Business Credit Corporation (17)
10.25	Supplement to employment offer letter for Matthew Linnik, Ph.D. (18)*
10.26	Supplement to employment offer letter for William J. Welch (19)*
10.27	Supplement to employment offer letter for Theodora Reilly (19)*
10.28	Supplement to employment offer letter for Paul Jenn, Ph.D. (19)*
10.29	Supplement to employment offer letter for Bruce K. Bennett, Jr. (20)*
10.30	Supplement to employment offer letter for Kenneth R. Heilbrunn (8)*
10.31	Reserved.
10.32	Reserved.
10.33	Master Security Agreement, effective September 6, 2002, between the Company and General Electric Capital Corporation (21)
10.34	Promissory Note, dated as of September 26, 2002, between the Company and General Electric Capital Corporation (21)
10.35	Amendment to Promissory Note, effective as of September 27, 2002, between the Company and General Electric Capital Corporation (21)
10.36	Promissory Note, dated as of December 30, 2002, between the Company and General Electric Capital Corporation (22)
10.37	Promissory Note, dated as of April 23, 2003, between the Company and General Electric Capital Corporation (22)
10.38	Promissory Note, dated as of June 27, 2003, between the Company and General Electric Capital Corporation (23)
10.39	Promissory Note, dated as of September 26, 2003, between the Company and General Electric Capital Corporation (24)
10.40	Promissory Note, dated as of December 18, 2003, between the Company and General Electric Capital Corporation (28)

12

Exhibit
Number	Description
10.41	Lease Renewal Amendment, dated as of July 1, 2003, between the Company and General Electric Capital Corporation Successor In Interest to Comdisco, Inc. as of February 26, 2002 (24)
10.42	Underwriting Agreement, dated as of August 7, 2003, between the Company and Pacific Growth Equities, LLC (25)
10.43	Underwriting Agreement, dated as of February 19, 2004, between the Company and Pacific Growth Equities, LLC (27)
10.44	Form of Registration Rights Agreement, dated January 2002, between the Company and the initial purchasers (26)
10.45	Form of Stock Purchase Agreement, dated January 2002, between the Company and the initial purchasers (26)
10.46	Form of Registration Rights Agreement, dated February 5, 2001, between the Company and the initial purchasers (24)
10.47	Form of Stock Purchase Agreement, dated February 5, 2001, between the Company and the initial purchasers (24)
10.48	Form of Registration Rights Agreement, dated July 19, 2000, between the Company and the initial purchasers (24)
10.49	Form of Stock Purchase Agreement, dated July 19, 2000, between the Company and the initial purchasers (24)
10.50	Form of Registration Rights Agreement, dated February 10, 2000, between the Company and the initial purchasers (24)
10.51	Form of Stock Purchase Agreement, dated February 10, 2000, between the Company and the initial purchasers (24)
10.52	Underwriting Agreement, dated February 19, 2004, by and between the Company and Pacific Growth Equities, LLC (29)
10.53	Supplement to employment offer letter for Gail Sloan *
10.54	Promissory Note, dated as of March 31, 2004, between the Company and General Electric Capital Corporation
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* 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, 1999 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 (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 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.
(6)	Previously filed with the Company’s Registration Statement on Form S-1 (No. 33-76480) filed on March 16, 1994.
(7)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 1997 and incorporated by reference herein.
(8)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2002 and incorporated by reference herein.
(9)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 1994 and incorporated by reference herein.

13

(10)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 1995 and incorporated by reference herein.
(11)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 1995 and incorporated by reference herein.
(12)	Previously filed with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 1995 and incorporated by reference herein.
(13)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 1996 and incorporated by reference herein.
(14)	Previously filed with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated by reference herein.
(15)	Portions of the Exhibit 10.20 have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.
(16)	Previously filed with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2000 and incorporated by reference herein.
(17)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 1998 and incorporated by reference herein.
(18)	Previously filed with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated by reference herein.
(19)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2001 and incorporated by reference herein.
(20)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2002 and incorporated by reference herein.
(21)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2002 and incorporated by reference herein.
(22)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2003 and incorporated by reference herein.
(23)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2003 and incorporated by reference herein.
(24)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2003 and incorporated by reference herein.
(25)	Previously filed with the Company’s current report on Form 8-K filed August 12, 2003 and incorporated by reference herein.
(26)	Previously filed with the Company’s current report on Form 8-K filed January 16, 2002 and incorporated by reference herein.
(27)	Previously filed with the Company’s current report on Form 8-K filed February 20, 2004 and incorporated by reference herein.
(28)	Previously filed with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2003 and incorporated by reference herein.
(29)	Previously filed with the Company’s current report on Form 8-K filed February 20, 2004 and incorporated by reference herein.

(b) Reports on Form 8-K

     On February 17, 2004, we filed a current report on Form 8-K to report that our NDA for Riquent was accepted for review by the FDA. On February 20, 2004, we filed a current report on Form 8-K to report that we had entered into an underwriting agreement, pursuant to which we agreed to sell 8,695,653 shares of our common stock in an underwritten public offering, that we had granted the underwriter an option, exercisable within 30 days of the date of the prospectus supplement, to purchase an additional 1,304,347 shares to cover over-allotments, and that we had filed a prospectus supplement with the Securities and Exchange Commission relating to the offering of the shares. On February 26, 2004, we filed a current report on Form 8-K to report that we had completed our previously announced public offering. On March 2, 2004, we filed a current report on Form 8-K pursuant to which we furnished a release regarding our fourth quarter and year end financial results for 2003. On March 3, 2004, we filed a current report on Form 8-K to report that Steven Engle would present at the Lehman Brothers Seventh

14

Annual Global Healthcare Conference. On March 8, 2004, we filed a current report on Form 8-K to report that the underwriter for the February 2004 public offering of shares of common stock had purchased an additional 1,304,347 shares at the initial offering price per share pursuant to the over-allotment option granted to the underwriter in connection with the offering. On March 10, 2004, we filed a current report on Form 8-K to report that Steven Engle would present at the SG Cowen 24th Annual Healthcare Conference and that Gail Sloan was promoted to Vice President of Finance, Controller and Secretary. On March 11, 2004, we filed a current report on Form 8-K to report additional data from our Phase 3 and 2/3 clinical trials of Riquent. On March 22, 2004, we filed a current report on Form 8-K to report that Steven Engle would present at the Wells Fargo Securities Healthcare Conference. On April 21, 2004, we filed a current report on Form 8-K to report that we would present results from our clinical trials of Riquent® (abetimus sodium, formerly known as LJP 394) for the treatment of lupus renal disease at the 7th International Congress on Systemic Lupus Erythematosus (SLE) and Related Conditions.

15

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 7, 2004	/s/ Steven B. Engle
	Steven B. Engle
	Chairman and Chief Executive Officer (On behalf of the Registrant)
	/s/ Gail A. Sloan
	Gail A. Sloan
	Vice President of Finance, Controller and Secretary (As Principal Financial and Accounting Officer)

16

LA JOLLA PHARMACEUTICAL COMPANY

INDEX TO EXHIBITS

Exhibit
Number	Description
10.53	Supplement to employment offer letter for Gail Sloan
10.54	Promissory Note, dated as of March 31, 2004, between the Company and General Electric Capital Corporation
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EX-10.53

                                                                   EXHIBIT 10.53


February 23, 2004



Gail Sloan
6455 Nancy Ridge Drive
San Diego, CA  92121

Re:  Severance Agreement

Dear Gail,

      As a supplement to the offer letter and agreement dated March 20, 1996
between La Jolla Pharmaceutical Company ("LJP") and Gail Sloan ("Sloan") related
to Sloan's employment by LJP, Sloan and LJP hereby agree as follows:

      In connection with her employment with LJP, Sloan's new title will be Vice
President of Finance and Controller.

      If Sloan's employment is terminated by LJP without cause (as defined
below), or if a Change in Control of LJP (as defined below) occurs and Sloan'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)   Sloan will be entitled to receive from LJP a severance payment
                  equal to her 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 she 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
                  Sloan and LJP of a mutual release, in form satisfactory to
                  LJP, of all claims arising in connection with Sloan's
                  employment with LJP and termination thereof, and

            (ii)  Sloan 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 she has not found suitable employment, medical and
                  dental benefits coverage for Sloan and/or her 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 Sloan
                  and/or her 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 Sloan'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.

           For purposes hereof, "CAUSE" means Sloan has (i) engaged in serious
           criminal activity or other wrongful conduct that has an adverse
           impact on LJP, (ii) disregarded instructions given to her 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 her employment
           or fiduciary responsibilities to LJP.

           For purposes hereof, Sloan'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) Sloan is removed from Sloan's employment by, or resigns her
           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) Sloan's position is eliminated as a result of a reduction in
           force made to reduce over-capacity or unnecessary duplication of
           personnel and Sloan 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) Sloan resigns her
           employment with the Company or its successor rather than comply with
           a relocation of her primary work site more than 50 miles from LJP's
           headquarters.

           In Witness Whereof, LJP and Sloan have entered into this agreement
           as of ___April 23________ 2004.

           LA JOLLA PHARMACEUTICAL COMPANY

           By: /s/ Steven B. Engle                  /s/ Gail A. Sloan
               --------------------                 -------------------
                Steven B. Engle                     Gail Sloan
                Chairman & CEO                      Vice President of Finance
                                                    and Controller

EX-10.54

                                                                   EXHIBIT 10.54

                                 PROMISSORY NOTE
                                     3/31/03
                                 ----------------
                                     (DATE)

 FOR VALUE RECEIVED, LA JOLLA PHARMACEUTICAL COMPANY a corporation located at
 the address stated below ("MAKER") promises, jointly and severally if more than
 one, to pay to the order of GENERAL ELECTRIC CAPITAL CORPORATION or any
 subsequent holder hereof (each, a "PAYEE") at its office located at 401 MERRITT
 7 SUITE 23, NORWALK, CT 06851-1177 or at such other place as Payee or the
 holder hereof may designate, the principal sum of ONE HUNDRED EIGHTY EIGHT
 THOUSAND SIX HUNDRED TWENTY AND 07/00 ($188,620.07), with interest on the
 unpaid principal balance, from the date hereof through and including the dates
 of payment, at a fixed interest rate of Eight and Twenty Seven Hundredths
 percent (8.27%) per annum, to be paid in lawful money of the United States, in
 Forty-Two (42) consecutive monthly installments of principal and interest as
 follows:



          Periodic
       Installment                      Amount
- -------------------------             -----------
                                   
       Thirty-Six (36)                $5,321.69
       Five (5)                       $3,973.49


each ("Periodic Installment") and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on 4/1/04 and the following Periodic
Installments and the final installment shall be due and payable on the same day
of each succeeding month (each, a "Payment Date"). Such installments have been
calculated on the basis of a 360 day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date.

The acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee's
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a "SECURITY
AGREEMENT").

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten (10)
days after the same becomes due and payable; or (ii) Maker is in default under,
or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

Notwithstanding anything to the contrary contained herein or in the Security
Agreement, Maker may not prepay in full or in part any indebtedness hereunder
without the express written consent of Payee in its sole discretion.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed




by the courts having jurisdiction thereof. It is further agreed that without
limitation of the foregoing, all calculations of the rate of interest contracted
for, charged or received under this Note or any Security Agreement which are
made for the purpose of determining whether such rate exceeds the maximum lawful
contract rate, shall be made, to the extent permitted by applicable law, by
amortizing, prorating, allocating and spreading in equal parts during the period
of the full stated term of the indebtedness evidenced hereby, all interest at
any time contracted for, charged or received from Maker or otherwise by Payee in
connection with such indebtedness; provided, however, that if any applicable
state law is amended or the law of the United States of America preempts any
applicable state law, so that it becomes lawful for the Payee to receive a
greater interest per annum rate than is presently allowed, the Maker agrees
that, on the effective date of such amendment or preemption, as the case may be,
the lawful maximum hereunder shall be increased to the maximum interest per
annum rate allowed by the amended state law or the law of the United States of
America.

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "OBLIGOR") who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee's actual attorneys'
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.




Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

                                       
                                          LA JOLLA PHARMACEUTICAL COMPANY

 /s/ Lisa Peraza                          By:  /s/ Gail A. Sloan
 ----------------------------------            ---------------------
 (Witness)

 Lisa Peraza                              Name: Gail A. Sloan
 ----------------------------------             -------------
 (Print name)

 6455 Nancy  Ridge Drive                  Title: V.P. of Finance and Controller
 ----------------------------------              -------------------------------
San Diego, CA 92121
- -------------------
  (Address)
                                          Federal Tax ID #:   330361285
                                                            ----------------
                                          Address:   6455 Nancy Ridge Drive,
                                          San Diego, San Diego County, CA 92121

EX-31.1

                                                                    EXHIBIT 31.1

                            SECTION 302 CERTIFICATION

I, Steven B. Engle, certify that:

      1.    I have reviewed this Quarterly Report on Form 10-Q of La Jolla
            Pharmaceutical Company;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer(s) and I are responsible
            for establishing and maintaining disclosure controls and procedures
            (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

            a)    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b)    Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

            c)    Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer(s) and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of registrant's board of directors (or persons performing
            the equivalent functions):

            a)    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

            b)    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date: May 7, 2004                          /s/ Steven B. Engle
                                           -------------------------------
                                           Steven B. Engle
                                           Chairman and Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2


                            SECTION 302 CERTIFICATION

I, Gail A. Sloan, certify that:

      1.    I have reviewed this Quarterly Report on Form 10-Q of La Jolla
            Pharmaceutical Company;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer(s) and I are responsible
            for establishing and maintaining disclosure controls and procedures
            (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

            a)    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b)    Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

            c)    Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer(s) and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of registrant's board of directors (or persons performing
            the equivalent functions):

            a)    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

            b)    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date: May 7, 2004                                   /s/ Gail A. Sloan
                                                    ----------------------------
                                                    Gail A. Sloan
                                                    Vice President of Finance,
                                                    Controller and Secretary

EX-32.1

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned, in his or her capacity as an officer of La Jolla
Pharmaceutical Company (the "Registrant"), hereby certifies, for purposes of 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

      -     the Quarterly Report of the Registrant on Form 10-Q for the quarter
            ended March 31, 2004 (the "Report"), which accompanies this
            certification, fully complies with the requirements of Section 13(a)
            or 15(d) of the Securities Exchange Act of 1934; and

      -     the information contained in the Report fairly presents, in all
            material respects, the financial condition of the Registrant at the
            end of such quarter and the results of operations of the Registrant
            of such quarter.

Dated:  May 7, 2004

                                       /s/ Steven B. Engle
                                       -----------------------------------------
                                       Steven B. Engle
                                       Chairman and Chief Executive Officer

                                        /s/ Gail A. Sloan
                                        ----------------------------------------
                                        Gail A. Sloan
                                        Vice President of Finance, Controller
                                        and Secretary

Note:   A signed original of this written statement required by Section 906 has
        been provided to La Jolla Pharmaceutical Company and will be retained by
        La Jolla Pharmaceutical Company and furnished to the Securities and
        Exchange Commission or its staff upon request.