-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ELW9/96fU8v1qiFSmOn7AL00/0qmKoi+NS8S0Ndy4AVDNQNYdty+QOHmWYCA9Ltu qgxgyxloB3D8sVufNZFnUQ== 0000936392-97-001506.txt : 19971113 0000936392-97-001506.hdr.sgml : 19971113 ACCESSION NUMBER: 0000936392-97-001506 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LA JOLLA PHARMACEUTICAL CO CENTRAL INDEX KEY: 0000920465 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 330361285 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24274 FILM NUMBER: 97716572 BUSINESS ADDRESS: STREET 1: 6455 NANCY RIDGE DR CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194526600 MAIL ADDRESS: STREET 1: 6455 NANCY RIDGE DR CITY: SAN DIEGO STATE: CA ZIP: 92121 10-Q 1 FORM 10-Q 1 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 SEPTEMBER 30, 1997 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 33-0361285 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 6455 NANCY RIDGE DRIVE 92121 SAN DIEGO, CA (Zip Code) (Address of Principal Executive Offices) Registrant's Telephone Number, Including Area Code: (619) 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 September 30, 1997 was 18,140,880. 2 LA JOLLA PHARMACEUTICAL COMPANY FORM 10-Q QUARTERLY REPORT INDEX
COVER PAGE.................................................................................1 INDEX .....................................................................................2 PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements (Unaudited) Balance Sheets as of September 30, 1997 and December 31, 1996 .................... 3 Statements of Operations for the three months and nine months ended September 30, 1997 and 1996 ...................................................... 4 Statements of Cash Flows for the nine months ended September 30, 1997 and 1996.... 5 Notes to Financial Statements .................................................... 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................................... 7 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk .............. * PART II. OTHER INFORMATION ITEM 1. Legal Proceedings ....................................................... * ITEM 2. Changes in Securities ................................................... * ITEM 3. Defaults upon Senior Securities ......................................... * ITEM 4. Submission of Matters to a Vote of Security Holders ..................... * ITEM 5. Other information ....................................................... * ITEM 6. Exhibits and Reports on Form 8-K ........................................ 10 SIGNATURE .............................................................................. 13
* No information provided due to inapplicability of item. 2 3 LA JOLLA PHARMACEUTICAL COMPANY PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BALANCE SHEETS (in thousands)
September 30, December 31, 1997 1996 ------------- ------------ (Unaudited) (Note) ASSETS Current assets: Cash and cash equivalents $ 12,310 $ 6,613 Short-term investments 15,969 17,621 Receivable -- 4,000 Other current assets 860 1,233 -------- -------- Total current assets 29,139 29,467 Property and equipment, net 1,187 1,361 Patent costs and other assets, net 1,044 859 -------- -------- Total assets $ 31,370 $ 31,687 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 420 $ 1,539 Accrued expenses 623 1,106 Accrued payroll and related expenses 337 294 Deferred liabilities 2,293 -- Current portion of obligations under capital leases 204 642 -------- -------- Total current liabilities 3,877 3,581 Noncurrent portion of obligations under capital leases 26 168 Commitments Stockholders' equity: Common stock 181 173 Additional paid-in capital 80,224 76,307 Deferred compensation (59) (169) Accumulated deficit (52,879) (48,373) -------- -------- Total stockholders' equity 27,467 27,938 -------- -------- Total liabilities and stockholders' equity $ 31,370 $ 31,687 ======== ========
Note: The balance sheet at December 31, 1996 has been derived from audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete balance sheets. See accompanying notes. 3 4 LA JOLLA PHARMACEUTICAL COMPANY STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share amounts)
Three Months Ended Nine Months Ended September 30, September 30, ---------------------- --------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Revenue from collaborative agreement $ 2,297 $ -- $ 6,791 $ -- Expenses: Research and development 3,659 2,676 10,132 7,818 General and administrative 630 631 2,177 1,810 -------- -------- -------- -------- Total expenses 4,289 3,307 12,309 9,628 -------- -------- -------- -------- Loss from operations (1,992) (3,307) (5,518) (9,628) Interest expense (10) (42) (50) (150) Interest income 352 274 1,062 896 -------- -------- -------- -------- Net loss $ (1,650) $ (3,075) $ (4,506) $ (8,882) ======== ======== ======== ======== Net loss per share $ (.09) $ (.19) $ (.26) $ (.60) ======== ======== ======== ======== Shares used in computing net loss per share 17,445 16,160 17,338 14,777 ======== ======== ======== ========
See accompanying notes. 4 5 LA JOLLA PHARMACEUTICAL COMPANY STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, ---------------------- 1997 1996 -------- -------- OPERATING ACTIVITIES Net loss $ (4,506) $ (8,882) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation and amortization 446 567 Deferred compensation amortization 95 211 Change in operating assets and liabilities: Receivables 4,000 -- Other current assets 373 (861) Accounts payable and accrued expenses (1,602) 50 Accrued payroll and related expenses 43 (174) Deferred liabilities 2,293 -- -------- -------- Net cash provided by (used for) operating activities 1,142 (9,089) INVESTING ACTIVITIES Decrease (increase) in short-term investments 1,652 (11,326) Additions to property and equipment (259) (180) Increase in patent costs and other assets (198) (267) -------- -------- Net cash provided by (used for) investing activities 1,195 (11,773) FINANCING ACTIVITIES Net proceeds from issuance of common stock 3,940 9,833 Payments on obligations under capital leases (580) (630) Payment on notes receivable from stockholder -- 14 -------- -------- Net cash provided by financing activities 3,360 9,217 -------- -------- Net increase (decrease) in cash and cash equivalents 5,697 (11,645) Cash and cash equivalents at beginning of period 6,613 19,804 -------- -------- Cash and cash equivalents at end of period $ 12,310 $ 8,159 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 50 $ 150 ======== ======== SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Adjustment to deferred compensation for terminations $ 15 $ -- ======== ========
See accompanying notes. 5 6 LA JOLLA PHARMACEUTICAL COMPANY NOTES TO FINANCIAL STATEMENTS (Unaudited) SEPTEMBER 30, 1997 1. BASIS OF PRESENTATION The accompanying unaudited financial statements of La Jolla Pharmaceutical Company (the "Company") have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles 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 and nine months ended September 30, 1997 are not necessarily indicative of the results that may be expected for other quarters or the year ended December 31, 1997. 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, 1996 included in the Company's Form 10-K filed with the Securities and Exchange Commission. 2. ACCOUNTING POLICIES REVENUE RECOGNITION Revenue from collaborative agreements is recorded when earned. Payments received in advance under these agreements are recorded as deferred revenue and are included in deferred liabilities on the balance sheet until earned. ACCOUNTING STANDARD ON EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 128, "Earnings per Share" (Statement No. 128), which supersedes Accounting Principles Board Opinion 15. Statement No. 128 replaces the presentation of "primary earnings per share" with "basic earnings per share" which includes no dilution and is based on weighted-average common shares outstanding for the period. Statement No. 128 is effective for financial statements issued for periods ending after December 15, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. The adoption of this statement is not expected to have a material impact as the Company is currently in a net loss position and therefore stock options and warrants are not included in the computation of earnings per share since their effect is anti-dilutive. 3. COLLABORATIVE AGREEMENT In September 1997, the Company issued 831,152 shares of common stock to Abbott Laboratories for an aggregate purchase price of $4,000,000 in accordance with the terms of the Company's collaborative agreement with Abbott Laboratories. 6 7 LA JOLLA PHARMACEUTICAL COMPANY PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The discussion below includes forward-looking statements, including without limitation those dealing with the Company's drug development plans and clinical trials, its relationship with Abbott Laboratories ("Abbott"), and other matters described in terms of the Company's plans and expectations. The forward-looking statements involve risks and uncertainties and a number of factors, both foreseen and unforeseen, could cause actual results to differ from the Company's current expectations. The Company's ongoing Phase II/III clinical trial of LJP 394, the Company's drug candidate for the treatment of lupus, could result in a finding that LJP 394 is not effective in producing a sustained reduction of dsDNA antibodies in large patient populations or does not provide a meaningful clinical benefit. The Company's other potential drug candidates are at earlier stages of development and involve comparable risks. Payments by Abbott to the Company are contingent upon progress of clinical trials and the Company's achievement of certain other milestones that might not be met. The relationship with Abbott could be terminated by either party for various reasons. Clinical trials could be delayed and could have negative or inconclusive results. Additional risk factors include the uncertainty of future revenue from product sales or other sources such as collaborative relationships, the uncertainty of future profitability, the Company's dependence on patents and other proprietary rights, the Company's limited manufacturing capabilities and the Company's lack of marketing experience. Readers are cautioned not to place undue reliance upon forward-looking statements, which speak only as of the date hereof, and the Company undertakes 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 below and in other reports and registration statements of the Company filed with the SEC from time to time. OVERVIEW Since its inception in May 1989, the Company has devoted substantially all of its resources to the research and development of technology and potential drugs to treat antibody-mediated diseases. The Company has never generated any revenue from product sales and has relied upon private and public investors, revenues from collaborative agreements, equipment lease financings and interest income on invested cash balances for its working capital. The Company has been unprofitable since inception and expects to incur substantial additional operating losses for at least the next several years as it increases expenditures on research and development and allocates significant and increasing resources to its manufacturing, clinical trials, and marketing activities. The Company's activities to date are not as broad in depth or scope as the activities it must undertake in the future, and the Company's historical operations and the financial information reported below are not indicative of its future operating results or financial condition. The Company expects that losses will 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. The Company's research and development expenses are expected to increase significantly in the future as the Company increases its development efforts. As of September 30, 1997, the Company's accumulated deficit was approximately $52.9 million. The Company's business is subject to significant risks including, but not limited to, the risks inherent in its research and development efforts, including clinical trials, uncertainties associated with both obtaining and enforcing its patents and with the patent rights of others, the lengthy, expensive and uncertain process of seeking regulatory approvals, uncertainties regarding government reforms and of product pricing and reimbursement levels, technological change and competition, manufacturing uncertainties and dependence on its collaborative relationship with Abbott. Even if the Company's product 7 8 LA JOLLA PHARMACEUTICAL COMPANY candidates appear promising at an early stage of development, they may not reach the market for numerous reasons. Such reasons include 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 proprietary rights of third parties. All of the Company's product development efforts are based upon technologies and therapeutic approaches that are unproven. There can be no assurance that LJP 394 will reliably induce or sustain suppression of disease-causing antibodies, or that LJP 394 will prove to be safe or effective. Furthermore, clinical trials of LJP 394 may be viewed as a test of the Company's entire Tolerance Technology approach. If these clinical trials are unsuccessful, the applicability of the Company's Tolerance Technology to other antibody-mediated diseases will be highly uncertain. RESULTS OF OPERATIONS The Company earned $2.3 and $6.8 million in revenue from its collaborative agreement with Abbott in the three and nine months ended September 30, 1997, respectively, and earned no revenues for the same periods in 1996. Payments received in advance under the collaborative agreement with Abbott are recorded as deferred revenue and are included in deferred liabilities on the balance sheet until earned. Total revenue payments of approximately $9.1 million were received in advance under the collaborative agreement with Abbott in the first nine months of 1997, of which approximately $2.3 million was unearned as of September 30, 1997. The receipt of payments and the recognition of revenue from the collaborative agreement with Abbott may vary significantly from quarter to quarter and from year to year depending on the level of research effort expended and the timing of milestone payments. There can be no assurance that the Company will realize any further revenue from the Abbott arrangement or any other collaborative arrangement. Research and development expenses increased to $3.7 million for the third quarter of 1997 from $2.7 million for the same period in 1996. For the nine months ended September 30, 1997, research and development expense increased to $10.1 million from $7.8 million for the same period in 1996. The increase was due primarily to manufacturing scale-up activities including increased facilities expenditures, the conduct of the Company's Phase II/III clinical trial of LJP 394, and the expansion of the Company's research and development programs. The Company's research and development expenses are expected to increase significantly in the future as the organization grows, efforts to develop additional drug candidates are intensified and potential products progress into and through clinical trials. General and administrative expenses decreased slightly to $630,000 for the third quarter of 1997, from $631,000 for the same period in 1996. For the nine months ended September 30, 1997, general and administrative expense increased to $2.2 million from $1.8 million for the same period in 1996. Several factors contributed to this increase, including increased personnel costs to support increased research and development and clinical activities, increased facilities expenditures and expanded business development activities. The Company expects general and administrative expenses to increase at a greater rate in the future to support expanded research and development, manufacturing and business development activities. In the future, general and administrative expenses may increase due to payment obligations to a financial consultant arising in connection with certain payments expected from Abbott under the collaborative agreement. Interest income increased to $352,000 for the third quarter of 1997 from $274,000 for the same period in 1996. For the nine months ended September 30, 1997, interest income increased to $1.1 million from $896,000 for the same period in 1996. The increase was due to higher investment balances following receipt of the net proceeds of the Company's follow-on public offering in July and August 1996, its sale of stock to Abbott in December 1996, the initial license payment from Abbott received in January 8 9 LA JOLLA PHARMACEUTICAL COMPANY 1997 and the receipt of revenue payments under the collaborative agreement with Abbott during the first nine months of 1997. For the third quarter of 1997, interest expense decreased to $10,000 from $42,000 for the same period in 1996. For the nine months ended September 30, 1997, interest expense decreased to $50,000 from $150,000 for the same period in 1996. The decrease was the result of decreases in the Company's capital lease obligations as compared to the same period in 1996. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1997, the Company had incurred a cumulative net loss since inception of approximately $52.9 million, and had financed its operations through private and public offerings of its securities, payments under collaborative agreements, capital and operating lease transactions, and interest income on its invested cash balances. As of September 30, 1997, the Company had raised $79.6 million in net proceeds since inception from sales of equity securities. At September 30, 1997, the Company had $28.3 million in cash, cash equivalents and short-term investments, as compared to $24.2 million at December 31, 1996. The Company's working capital at September 30, 1997 was $25.3 million, as compared to $25.9 million at December 31, 1996. The increases in cash, cash equivalents and short-term investments resulted from the receipt of the initial license fee and revenue payments under the Company's collaborative agreement with Abbott, the sale of stock to Abbott in September 1997 for net proceeds of approximately $3.9 million, and the financing of property and equipment under operating leases, partially offset by the continued use of the Company's cash toward expenses of ongoing clinical and research and development programs and related general and administrative expenses. The decrease in working capital resulted from use of cash to fund operations and the deferral of unearned advance revenue payments under the collaborative agreement with Abbott offset by the net proceeds received from the sale of stock to Abbott in September 1997. The Company invests its cash in corporate and U.S. Government backed debt instruments. As of September 30, 1997, the Company had acquired an aggregate of $4.8 million in property and equipment, of which approximately $3.2 million had been acquired through capital lease obligations. In addition, the Company leases its office and laboratory facilities and certain property and equipment under operating leases. The Company has no material commitments for the acquisition of property and equipment but anticipates increasing investment in property and equipment in connection with the enhancement of its manufacturing and research capabilities. The Company intends to use its financial resources to fund research and development, manufacturing scale-up and for working capital and other general corporate purposes. Anticipated near-term expenses include the expansion of manufacturing and research activities, including development of other drug candidates in addition to LJP 394. The amounts actually expended for each purpose may vary significantly depending upon numerous factors, including the results of clinical studies, the timing of regulatory applications and approvals, and technological advances. Expenditures will also depend upon the establishment and progress of collaborative arrangements, contract research and the availability of other financing. There can be no assurance that these funds will be available on acceptable terms, if at all. The Company anticipates that its existing capital and interest earned thereon will be sufficient to fund the Company's operations as currently planned through 1998. The Company's future capital requirements will depend on many factors, including continued scientific progress in its research and development programs, the size and complexity of these programs, the scope and results of clinical trials, the time and costs involved in applying for regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims, competing technological and market developments, the ability of the Company to maintain its collaborative arrangement with Abbott and to establish and maintain additional collaborative relationships and the cost of manufacturing scale-up and effective commercialization activities and arrangements. The Company expects to incur significant losses each 9 10 LA JOLLA PHARMACEUTICAL COMPANY year for at least the next several years as it expands its current research and development programs and invests increasing amounts of capital in manufacturing scale-up and administration of a more complex organization. It is possible that the Company's cash requirements will exceed current projections and that the Company will therefore need additional financing sooner than currently expected. The Company has no current means of generating cash flow from operations, and its lead drug candidate, LJP 394, will not generate revenues, if at all, until it has been proven safe and effective, has received regulatory approval, and has been successfully commercialized, a process that is expected to take at least the next several years. The Company's other drug candidates are much less developed than LJP 394. There can be no assurance that the Company's 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, the Company must continue to rely upon outside sources of financing to meet its capital needs for the foreseeable future. Abbott's funding of the development costs for LJP 394 and milestone payments are expected to enhance the Company's short-term liquidity by minimizing the expenditure of the Company's own funds on further development of LJP 394. However, the Company anticipates increasing expenditures on manufacturing activities and the development of other drug candidates, and in the long run, the Company's consumption of cash will necessitate additional sources of financing. Furthermore, the Company has no internal sources of liquidity, and termination of the Abbott arrangement would have a serious adverse effect on the Company's ability to generate sufficient cash to meet its needs. The Company will continue to seek capital through any appropriate means, including issuance of its securities and establishment of additional collaborative arrangements. However, there can be no assurance that additional financing will be available on acceptable terms, and the Company's negotiating position in its capital-raising efforts may worsen as it continues to use its existing resources. Financing through collaborative arrangements is uncertain because payments under the Company's collaborative agreement with Abbott are subject to certain termination rights, including related to progress in clinical trials for LJP 394, and there is no assurance that the Company will be able to enter into further collaborative relationships. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS
Exhibit No. Description - ----------- ----------- 3.1 Intentionally omitted 3.2 Bylaws of the Company (1) 3.3 Restated Certificate of Incorporation of the Company (3) 10.1 Intentionally omitted 10.2 Stock Option Agreement dated February 4, 1993 entitling Joseph Stemler to purchase 35,000 shares of Common Stock (1)* 10.3 Letter regarding terms of employment and potential severance of Stephen M. Coutts (1) and the modification to this letter (10)*
10 11 LA JOLLA PHARMACEUTICAL COMPANY 10.4 Intentionally omitted 10.5 Intentionally omitted 10.6 Steven B. Engle Employment Agreement(1) and Amendment No. 1 (10)* 10.7 Form of Directors and Officers Indemnification Agreement(1) 10.8 Intentionally omitted 10.9 Exclusive License Agreement dated September 1, 1991 regarding PLA2 inhibition technology between the Company and the Regents of the University of California (1) 10.10 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 (1) 10.11 Consulting Agreement dated September 1, 1991 between the Company and Dr. Edward A. Dennis (1) 10.12 Agreement dated September 1, 1991 regarding stock purchase between the Company and Dr. Edward A. Dennis (1) 10.13 Form of Employee Invention and Confidential Information Agreement(1) 10.14 Industrial Real Estate Lease (1) 10.15 Intentionally omitted 10.16 Master Lease Agreement dated June 22, 1993 with Aberlyn Capital Management Limited Partnership ("ACM") and related Agreements to Issue Warrant with Warrants issued to ACM and Aberlyn Holding Company, Inc. (1) 10.17 La Jolla Pharmaceutical Company 1989 Incentive Stock Option Plan and 1989 Nonstatutory Stock Option Plan (1)* 10.18 Form of Stock Option Agreement under the 1989 Nonstatutory Stock Option Plan (1) 10.19 La Jolla Pharmaceutical Company 1994 Incentive Stock Option Plan (1)* 10.20 Intentionally omitted 10.21 Letter 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 (1) 10.22 Letter Agreement dated December 23, 1993 between the Company and Aberlyn Holding Company, Inc. regarding Aberlyn's engagement as financial and investment banking advisor to the Company with respect to potential strategic alliances with Korean pharmaceutical companies (1) 10.23 Intentionally omitted 10.24 Intentionally omitted 10.25 Second Amendment to Lease dated June 30, 1994 by and between the Company and BRE Properties, Inc. (2) 10.26 Intentionally omitted 10.27 Third Amendment to Lease dated January 26, 1995 by and between the Company and BRE Properties, Inc. (4) 10.28 Intentionally omitted
11 12 LA JOLLA PHARMACEUTICAL COMPANY 10.29 Master Lease Agreement dated September 13, 1995 by and between the Company and Comdisco Electronics Group (5) 10.30 Intentionally omitted 10.31 Agreement dated September 22, 1995 between the Company and Joseph Stemler regarding option vesting (6)* 10.32 Consulting Agreement dated January 1, 1996 between the Company and Joseph Stemler(6)* 10.33 Building Lease Agreement effective November 1, 1996 by and between the Company and WCB II-S BRD Limited Partnership (7) 10.34 Master Lease Agreement dated December 20, 1996 by and between the Company and Transamerica Business Credit Corporation(9) 10.35 License and Supply Agreement dated December 23, 1996 by and between the Company and Abbott Laboratories (8) 10.36 Stock Purchase Agreement dated December 23, 1996 by and between the Company and Abbott Laboratories (9) 10.37 Option Amendment Agreement dated November 3, 1997 between the Company and Peter G. Ulrich(11)* 23.1 Consent of Ernst & Young LLP, independent auditors(9) 27 Financial Data Schedule(11)
- ---------- * This exhibit is a management contract or compensatory plan or arrangement. (1) Previously filed with the Company's Registration Statement on Form S-1 (No. 33-76480) as declared effective by the Securities and Exchange Commission on June 3, 1994. (2) Previously filed with the Company's quarterly report on Form 10-Q for the quarter ended June 30, 1994 and incorporated by reference herein. (3) Previously filed with the Company's annual report on Form 10-K for the fiscal year ended December 31, 1994 and incorporated by reference herein. (4) Previously filed with the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1995 and incorporated by reference herein. (5) Previously filed with the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1995 and incorporated by reference herein. (6) 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. (7) Previously filed with the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1996 and incorporated by reference herein. (8) Portions of the Exhibit 10.35 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. (9) 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. (10) Previously filed with the Company's quarterly report on Form 10-Q for the quarter ended June 30, 1997 and incorporated by reference herein. (11) Filed herein. (b) REPORTS ON FORM 8-K None 12 13 LA JOLLA PHARMACEUTICAL COMPANY SIGNATURE SEPTEMBER 30, 1997 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: November 12, 1997 By: /s/ Wood C. Erwin ------------------------- Wood C. Erwin Vice President Finance Chief Financial Officer Signed both on behalf of the Registrant and as Principal Accounting Officer. 13 14 LA JOLLA PHARMACEUTICAL COMPANY INDEX TO EXHIBITS
Sequentially Exhibit Numbered Number Exhibit Page - ------ ------- ------------- 10.37 Option Amendment Agreement dated November 3, 1997 between the Company and Peter G. Ulrich 15 27 Financial Data Schedule 16
14 EX-10.37 2 EXHIBIT 10.37 1 EXHIBIT 10.37 OPTION AMENDMENT AGREEMENT This Option Amendment Agreement (this "AGREEMENT") is made effective as of November 3, 1997 by and between La Jolla Pharmaceutical Company, a Delaware corporation (the "COMPANY") and Peter G. Ulrich ("EXECUTIVE"). Executive has received grants of options to purchase common stock of the Company pursuant to the Company's 1994 Stock Incentive Plan (the "PLAN") (such options granted to Executive prior to December 31, 1997 being referred to herein as the "OPTIONS"), and the Company and Executive desire to amend the terms of the Options as set forth herein in consideration of Executive's ongoing employment. Therefore, notwithstanding anything in the Plan or the terms of grant of the Options to the contrary, the Company and Executive hereby agree that if a Change in Control of the Company (as defined in the Plan in its form as of the date hereof) occurs and Executive's employment with the Company or its successor is terminated by the Company or its successor, or if such a Change in Control occurs and Executive's employment with the Company or its successor is terminated by Executive following any change in Executive's title to any position other than Vice-President or any material reduction by the Company or its successor in Executive's responsibilities (other than any such reduction that is commensurate with Executive's assumption of the position of Vice-President of the surviving company), or any requirement that Executive's place of employment be in other than the San Diego area, then all 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 such Options were received, provided that in no case will such Options be exercisable beyond the duration of the original term thereof, and provided further that nothing herein is intended to require the extension of the exercise period of any Option that qualifies as an incentive stock option under the Internal Revenue Code and applicable regulations thereunder, and the exercise period thereof shall not be extended beyond the termination date otherwise provided by the award grant unless Executive, in his sole and unqualified discretion, elects to forego incentive stock option treatment and extend the exercise period thereof as provided herein. This Agreement does not apply to any options granted to Executive after December 31, 1997. IN WITNESS WHEREOF, Executive and the Company have entered into this Amendment as of the date written above. LA JOLLA PHARMACEUTICAL COMPANY By: /s/ Steven B. Engle /s/ Peter G. Ulrich -------------------------- -------------------- Name: Steven B. Engle Peter G. Ulrich -------------------------- Title: Chairman & CEO ------------------------- EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1996 JAN-01-1997 SEP-30-1997 12,310 15,969 0 0 0 860 4,806 3,619 31,370 3,877 26 0 0 181 27,286 31,370 0 6,791 0 0 12,309 0 50 (4,506) 0 (4,506) 0 0 0 (4,506) (0.26) (0.26)
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