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Article by DailyStocks_admin    (02-04-13 02:49 AM)

Description

Anthera Pharmaceuticals, Inc. Director ADVISORS LLC ORBIMED bought 5,700,000 shares on 5-19-2012 at $ 0.66

BUSINESS OVERVIEW

Overview

Anthera Pharmaceuticals, Inc. is a biopharmaceutical company focused on developing and commercializing products to treat serious diseases associated with inflammation. We currently have one Phase 2 clinical program, blisibimod. Two of our product candidates, varespladib and varespladib sodium, are designed to inhibit a novel enzyme target known as secretory phospholipase A 2 , or sPLA 2 . Elevated levels of sPLA 2 have been implicated in a variety of acute inflammatory conditions, including acute coronary syndrome and acute chest syndrome associated with sickle cell disease, as well as in chronic diseases, including stable coronary artery disease, or CAD. In addition, blisibimod targets elevated levels of B-lymphocyte stimulator, or BLyS, also known as B-cell Activating Factor, or BAFF, which has been associated with a variety of B-cell mediated autoimmune diseases, including systemic lupus erythematosus, or lupus, lupus nephritis, or LN, vasculitis, rheumatoid arthritis, multiple sclerosis, Sjögren's Syndrome, Graves' Disease and others.

On March 9, 2012, an independent data safety monitoring board (DSMB) recommended stopping the Company's VISTA-16 clinical study for varespladib. After review of the totality of evidence, including the emerging unblinded data from VISTA-16, the DSMB was unanimous in its view that there was cogent evidence to recommend early termination of the trial. According to the DSMB, the chief reason is the inability of VISTA-16 to detect a statistically significant benefit of the drug on the prespecified primary and secondary endpoints even if the trial continues to its scheduled termination. We believe that the DSMB's decision was based on the belief that the risk profile of the drug would not outweigh any benefit. As a result, we have closed enrollment in the study and informed all investigators to remove patients from therapy immediately. We have also closed enrollment in our IMPACTS-2 clinical study for varespladib sodium.

While data continues to be made available to us, and while we continue to assess these data, based on the DSMB recommendation we expect that we will not engage in any further development activities of our sPLA 2 portfolio.

We were incorporated in Delaware in 2004. Our corporate headquarters are located at 25801 Industrial Boulevard, Suite B, Hayward, California 94545 and our telephone number is (510) 856-5600.

We have worldwide rights to develop and commercialize our products in all indications and markets, with the exception of Japan where Shionogi & Co., Ltd. retains commercial rights to our sPLA 2 product candidates. Our current development plans are focused on acute treatment and orphan indications that may provide an accelerated and cost-efficient path to regulatory approval and commercialization. We believe that certain of these markets can be commercialized through a limited specialty sales force. In addition, we believe that our product candidates can also address market opportunities in chronic indications and we may seek development and commercialization partners to address chronic, non-specialty and international markets.

Inflammation and Diseases

The inflammatory process is a powerful and essential early line of defense for protection against injury and to repair body tissue. As a result, it is tightly regulated by the body to ensure appropriate activation and prompt resolution. However, under certain circumstances, the normal process can malfunction, leading to acute or chronic inflammation or inappropriate activation directed against the body's own tissues. All of these circumstances can cause significant damage to cells and tissues, leading to a range of inflammatory disorders, such as cardiovascular and autoimmune diseases.

Our sPLA 2 Inhibition Portfolio

Building upon our knowledge of the regulation of inflammatory pathways and the growing body of evidence that links inflammation to multiple disease states, we believe that we have developed a leadership position in the field of sPLA 2 inhibition. Our sPLA 2 inhibitors have been studied in a number of inflammatory disorders in multiple therapeutic areas. The effect of our sPLA 2 inhibitors on sPLA 2 concentration and activity have been implicated in acute coronary syndrome and acute chest syndrome associated with sickle cell disease. We currently have the two most advanced sPLA 2 inhibitors in clinical development.

Our first product candidate, varespladib (an oral prodrug of varespladib sodium), is a broad-spectrum inhibitor of sPLA 2 enzymes, including type IIa, V and X. The American Heart Association defines acute coronary syndrome as any group of clinical symptoms related to acute myocardial ischemia, including unstable angina, or UA. Varespladib, when combined with Lipitor (atorvastatin), is one of only a few therapeutics in development with the potential to offer a unique and synergistic treatment approach targeting systemic inflammation, elevated lipid levels and the inflammatory path of atherosclerosis as part of physician-directed standard of care. Through its novel mechanism of action, varespladib may have applications in a broad range of acute and chronic cardiovascular diseases. Based on the successful results of our completed Phase 2b, FRANCIS, clinical study, we initiated enrollment in a Phase 3 clinical study, VISTA-16, in patients with acute coronary syndrome in June 2010. In March 2012, we closed enrollment in the study and informed all investigators to remove patients from therapy based on the recommendation from an independent data safety monitoring board.

Our second product candidate, varespladib sodium, is an intravenously administered inhibitor of sPLA 2 ,which we may evaluate in a Phase 2 clinical study for the prevention of acute chest syndrome associated with sickle cell disease. Acute chest syndrome is a form of inflammation-induced lung failure and is the most common cause of death in patients with sickle cell disease. Given that there are currently no approved drugs for the prevention of acute chest syndrome associated with sickle cell disease, we have received orphan drug designation and fast track status from the FDA for varespladib sodium. In March 2012, we closed enrollment in our IMPACTS-2 study for varespladib sodium and informed all investigators to remove patients from therapy based on the recommendation from an independent data safety monitoring board.

We also have a broad series of additional sPLA 2 inhibitors designed with distinct chemical scaffolds in preclinical development. These product candidates are intended to provide new sPLA 2 inhibitors for our existing target indications as well as new candidates for other therapeutic areas. Our lead candidate within the series, A-003, is chemically distinct from varespladib sodium and varespladib and has shown increased potency against the target enzymes and higher drug exposure after dosing in preclinical studies. As a result, A-003 may confer beneficial pharmacodynamic effects in patients and can be formulated for oral or intravenously administered use.

We have explored the use of our varespladib and varespladib sodium sPLA 2 inhibitors as both topical and inhalation therapies in animal models for the treatment of atopic dermatitis and asthma, respectively. Results from a standard mouse model of edema demonstrated that topically administered varespladib was equivalent to the marketed immunosuppressant Elidel in resolving inflammation. In a sheep model of allergen-induced asthma, inhaled varespladib sodium demonstrated an improvement in lung function similar to inhaled steroids.

While data continues to be made available to us, and while we continue to assess these data, based on the DSMB recommendation to stop the VISTA-16 study for varespladib, we expect that we will not engage in any further development activities of our sPLA 2 portfolio.

sPLA 2 Biology

sPLA 2 is a family of enzymes directly involved in the acute and chronic steps of an inflammatory response. sPLA 2 activity is highly elevated during the early stages of inflammation, and its acute effects serve to substantially amplify the inflammatory process. The sPLA 2 enzyme catalyzes the first step in the arachidonic acid pathway of inflammation, one of the main metabolic processes for the production of inflammatory mediators, which, when amplified, are responsible for causing damage to cells and tissue. Specifically, sPLA 2 breaks down phospholipids that result in the formation of fatty acids such as arachidonic acid. Arachidonic acid is subsequently metabolized to form several pro-inflammatory and thrombogenic molecules.

In cardiovascular diseases such as acute coronary syndrome, elevated levels of sPLA 2 mass and sPLA 2 activity have acute and chronic implications on disease progression and patient outcomes. In published studies and our own clinical studies, significant elevations in sPLA 2 activity and mass have been seen from 24 hours to two weeks following an event constituting acute coronary syndrome and can persist for up to an additional 12 weeks thereafter. Shortly after a heart attack, sPLA 2 is dramatically elevated, amplifying inflammation that is associated with more frequent and secondary cardiovascular events. This resulting elevated level of inflammation is problematic for acute coronary syndrome patients who are already at higher risk of complications during the weeks following their initial event. For example, increased inflammation can destabilize vulnerable vascular lesions or atherosclerotic plaque, destroy damaged but viable cardiac cells and adversely modify lipids, any of which may lead to the recurrence of a major adverse cardiovascular event, or MACE.

Historical and recent clinical results have demonstrated circulating levels of sPLA 2 are significantly correlated with a well-established inflammatory marker, C-reactive protein, or CRP. These and other clinical studies have also demonstrated that sPLA 2 independently predicts coronary events in patients that have recently experienced an acute coronary syndrome and patients with stable CAD independent of other standard risk factors. In a stable cardiovascular patient, sPLA 2 not only sustains chronic vascular inflammation as discussed earlier, but it also adversely remodels lipoproteins such as low-density lipoprotein cholesterol, or LDL-C. sPLA 2 interacts with LDL-C in a series of reactions that result in smaller, more pro-atherogenic and pro-inflammatory LDL-C particles. Moreover, these modified lipoproteins have a reduced affinity for LDL-C receptors, which are responsible for removal of cholesterol from the body. As a result, LDL-C remains in circulation longer and has a greater tendency to deposit in the artery wall. This increased LDL-C deposition and sustained chronic vascular inflammation may contribute to the development of atherosclerosis.

Varespladib

Varespladib is an orally administered pro-drug of varespladib sodium, which is a broad-spectrum, once-daily inhibitor of the IIa, V and X iso-forms of the sPLA 2 enzyme that has demonstrated potent anti-inflammatory, lipid-lowering and lipid-modulating treatment effects in multiple clinical studies. We commenced the Phase 3 VISTA-16 study to evaluate varespladib in combination with atorvastatin therapy, for the short-term (16-week) treatment of acute coronary syndrome. We have an agreement with the FDA on a Special Protocol Assessment, or SPA for the VISTA-16 study. During 2011, we revised operational aspects of our SPA and received agreement from the FDA on June 29, 2011. A SPA provides an opportunity for the clinical study sponsor to receive feedback from the FDA regarding the potential adequacy of a clinical study to meet certain regulatory and scientific requirements if conducted in accordance with the SPA agreement. A SPA is not a guarantee of an approval of a product candidate or any permissible claims about the product candidate.

To date, over 3,000 patients and healthy volunteers in at least 15 previous clinical studies have been exposed to varespladib. Varespladib was generally well-tolerated in studies where patients were exposed to a maximum of 48 weeks of therapy. Varespladib has been studied in combination with Lipitor (atorvastatin) in our Phase 2b clinical study, FRANCIS, in acute coronary syndrome patients and two earlier Phase 2 clinical studies, PLASMA and PLASMA-2, in stable CAD patients, the majority of whom were on various statin therapies.

We currently have all worldwide product rights to varespladib, except in Japan where Shionogi & Co., Ltd. retains rights. We originally licensed our sPLA 2 inhibitor portfolio, including varespladib and varespladib sodium, from Eli Lilly & Company, or Eli Lilly, and Shionogi & Co., Ltd. in July 2006.

In March 2012, an independent data safety monitoring board recommended stopping the Company's VISTA-16 clinical study for varespladib due to a lack of efficacy that could not be reasonably overcome in the remainder of the trial. As a result, the Company has closed enrollment in the study and informed all investigators to remove patients from therapy. Based on the DSMB recommendation we expect that we will not engage in any further development activities of our sPLA 2 portfolio.

Market Opportunity—Acute Coronary Syndrome

According to the American Heart Association, over 18 million people in the United States have experienced a cardiac event that constitutes acute coronary syndrome and an estimated 1.5 million Americans will have a new or recurrent heart attack. In addition, the American Heart Association estimates that worldwide, cardiovascular disease kills an estimated 17.5 million people each year. According to British Heart Foundation statistics, CAD, which often leads to acute coronary syndrome or heart attacks, accounts for 1.9 million deaths in Europe annually. According to the World Health Organization, or the WHO, cardiovascular disease is the most common cause of death in the western world and a major cause of hospital admissions. In addition, the American Heart Association provides that for people over the age of 40, 20% of them will die within one year following an initial heart attack, and over 33% of them will die within the first five years of an initial heart attack. These numbers are expected to increase given an aging population, as well as the rising epidemics of diabetes and obesity, two conditions known to increase the risk of acute coronary syndrome.

The American Heart Association defines acute coronary syndrome as any group of clinical signs and symptoms related to acute myocardial ischemia. Acute myocardial ischemia can often present as chest pain due to insufficient blood supply to the heart muscle that results from CAD. Acute coronary syndrome covers a spectrum of clinical conditions that include ST-elevated myocardial infarction, or STEMI, non-ST-elevated myocardial infarction, or NSTEMI, and UA. Both STEMI and NSTEMI are forms of a heart attack, where damage to the heart muscle occurs due to ischemia, which is lack of blood flow to tissues due to a blockage of a vessel. Typically, UA results in chest pain from ischemia, but does not cause permanent damage to the heart muscle.

Furthermore, for any patient who experiences an acute coronary syndrome, the risk of a secondary MACE is significantly increased immediately following the initial event. Large clinical outcome studies such as MIRACL and PROVE-IT have previously reported, and data from our own FRANCIS Phase 2b clinical study supports, the 16-week placebo rate of secondary MACE in acute coronary syndrome patients to be between 6.1% and 14.8%. Recent published clinical studies involving anti-platelet and anti-coagulant therapies in ACS patients including PLATO, APPRAISE-2 TRA-CER and ATLAS-ACS have reported 16-week placebo rate of secondary MACE in acute coronary syndrome patients to be between approximately 4.5% and 8.0%. These studies do not include the incidence of unstable angina as part of the composite end point. Unstable angina, included as a component of the MACE endpoint in the VISTA-16 clinical study, represented approximately 30% of the total MACE at 16 weeks in the FRANCIS clinical study with varespladib.

Current treatments for CAD other than interventional procedures include a variety of medications such as aspirin, statins, anti-platelet and anti-coagulant therapeutics. These medications are used to offer both acute and chronic benefits to patients. For patients presenting with acute coronary syndrome, therapeutics are administered quickly to improve blood flow to the heart and limit the risk associated with continued ischemia and thrombosis, which is the formation of a blood clot inside a vessel, which obstructs blood flow. In addition, interventional procedures and other medications, such as statins that are initiated early primarily for lipid benefits, are continued in an attempt to provide chronic protection against secondary MACE through improvement in lipid profiles such as lowering LDL-C.

Inflammation in Cardiovascular Disease

In patients experiencing an acute coronary syndrome, the relationship between higher levels of inflammation, as measured by CRP, sPLA 2 and interleukin-6, or IL-6, and increased risk for MACE has been demonstrated extensively. In numerous clinical studies with a variety of therapeutic interventions, reductions in CRP have been correlated with reductions in subsequent MACE.

CRP is one of the most commonly used marker of inflammation. It has been correlated with adverse cardiovascular outcomes in multiple clinical studies. Although a causative role for CRP has not been established, inflammation is known to promote acute coronary syndrome and CRP may play a direct role in both vascular inflammation as well as plaque rupture.

Statins reduce the level of CRP and other markers of inflammation in patients with stable CAD. In April 2001, the Journal of the American Medical Association published results from the MIRACL study describing the effect of statins in acute coronary syndrome, where inflammation is greatly elevated. 3,086 were randomized within 96 hours of their index event to treatment with high-dose Lipitor (atorvastatin) or placebo. Lipitor (atorvastatin) significantly reduced secondary MACE after 16 weeks. A second paper from the same study, published in Circulation in 2003, described the rapid decline of inflammatory markers in patients on statin treatment that was associated with reduced MACE. After 16 weeks, Lipitor (atorvastatin) reduced CRP levels by 34%.

MANAGEMENT DISCUSSION FROM LATEST 10K

Overview

We are a biopharmaceutical company focused on developing and commercializing products to treat serious diseases associated with inflammation. We currently have one Phase 2 clinical program, blisibimod. Two of our product candidates, varespladib and varespladib sodium, are designed to inhibit a novel enzyme target known as secretory phospholipase A2, or sPLA2. Elevated levels of sPLA2 have been implicated in a variety of acute inflammatory conditions, including acute coronary syndrome and acute chest syndrome associated with sickle cell disease, as well as in chronic diseases, including stable coronary artery disease. In addition, our Phase 2 product candidate, blisibimod, targets elevated levels of B-cell activating factor, or BAFF, which has been associated with a variety of B-cell mediated autoimmune diseases, including systemic lupus erythematosus, or lupus, lupus nephritis vasculitis, rheumatoid arthritis, multiple sclerosis, Sjögren's Syndrome, Graves' Disease and others.

On March 9, 2012, an independent data safety monitoring board (DSMB) recommended stopping the Company's VISTA-16 clinical study for varespladib. After review of the totality of evidence, including the emerging unblinded data from VISTA-16, the DSMB was unanimous in its view that there was cogent evidence to recommend early termination of the trial. According to the DSMB, the chief reason is the inability of VISTA-16 to detect a statistically significant benefit of the drug on the prespecified primary and secondary endpoints even if the trial continues to its scheduled termination. We believe that the DSMB's decision was based on the belief that the risk profile of the drug would not outweigh any benefit. As a result, we have closed enrollment in the study and informed all investigators to remove patients from therapy immediately. We have also closed enrollment in our IMPACTS-2 clinical study for varespladib sodium.

While data continues to be made available to us, and while we continue to assess these data, based on the DSMB recommendation we expect that we will not engage in any further development activities of our sPLA 2 portfolio.

We were incorporated and commenced operations in September 2004. Since our inception, we have generated significant losses. As of December 31, 2011, we had an accumulated deficit of approximately $201.0 million. In January 2012, Anthera Pharmaceuticals, Limited, a wholly-owned subsidiary, was incorporated in Ireland. The establishment of this subsidiary was part of the Company's ongoing growth activities and strategic plan. As of the date of this filing, we have never generated any revenue and have generated only interest income from cash and cash equivalents and short-term investments. We expect to incur substantial and increasing losses for at least the next several years as we pursue the development and commercialization of our product candidates.

To date, we have funded our operations through equity offerings, private placements of convertible debt and debt financings, raising net proceeds of approximately $224.4 million. We will need substantial additional financing to continue to develop our product candidates, obtain regulatory approvals and to fund operating expenses, which we will seek to raise through public or private equity or debt financings, collaborative or other arrangements with third parties or through other sources of financing. We cannot assure you that such funds will be available on terms favorable to us, if at all. In addition to the normal risks associated with development-stage companies, we may never successfully complete development of any of our product candidates, obtain adequate patent protection for our technology, obtain necessary government regulatory approval for our product candidates or achieve commercial viability for any approved product candidates. In addition, we may not be profitable even if we succeed in commercializing any of our product candidates.

Revenue

To date, we have not generated any revenue. We do not expect to generate revenue unless or until we obtain regulatory approval of, and commercialize, our product candidates or in-license additional products that generate revenue. We intend to seek to generate revenue from a combination of product sales, up-front fees and milestone payments in connection with collaborative or strategic relationships and royalties resulting from the licensing of the commercial rights to our intellectual property. We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the nature, timing and amount of milestone payments we may receive upon the sale of our products, to the extent any are successfully commercialized, as well as any revenue we may receive from our collaborative or strategic relationships.

Research and Development Expenses

Since our inception, we have focused our activities on our product candidate development programs. We expense research and development costs as they are incurred. Research and development expenses consist of personnel costs, including salaries, benefits and stock-based compensation, clinical studies performed by contract research organizations, or CROs, materials and supplies, licenses and fees and overhead allocations consisting of various administrative and facilities-related costs. Research and development activities are also separated into three main categories: licensing, clinical development and pharmaceutical development. Licensing costs consist primarily of fees paid pursuant to license agreements. Historically, our clinical development costs have included costs for preclinical and clinical studies. We expect to incur substantial clinical development costs for our Phase 2b clinical study named PEARL-SC for blisibimod, as well as for the development of our other product candidates. Pharmaceutical development costs consist of expenses incurred relating to clinical studies and product formulation and manufacturing.

We expense both internal and external research and development costs as incurred. We are developing our product candidates in parallel, and we typically use our employee and infrastructure resources across several projects. Thus, some of our research and development costs are not attributable to an individually named project, but rather are allocated across our clinical stage programs. These unallocated costs include salaries, stock-based compensation charges and related "fringe benefit" costs for our employees (such as workers compensation and health insurance premiums), consulting fees and travel.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation for employees in executive and operational functions, including clinical, chemical manufacturing, regulatory, finance and business development. Other significant costs include professional fees for legal services, including legal services associated with obtaining and maintaining patents. We will continue to incur significant general and administrative expenses as a public company, including costs for insurance, costs related to the hiring of additional personnel, payment to outside consultants, lawyers and accountants and complying with the corporate governance, internal controls and similar requirements applicable to public companies.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates.

While our significant accounting policies are more fully described in the accompanying notes to the financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2011, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.

Cash Flows

Cash flows from operating activities

Net cash used in operating activities was approximately $73.1 million for the year ended December 31, 2011. The net loss is higher than cash used in operating activities by $22.3 million. The primary drivers for the difference are adjustments for non-cash charges of $4.6 million in clinical trial accruals and changes in other operating assets and liabilities of $14.4 million, which are based upon our estimated clinical trial performance to date. In addition, adjustments for non-cash charges including stock-based compensation, amortization of discount on notes payable and debt issuance costs totaled $3.3 million.

Net cash used in operating activities was approximately $27.8 million for the year ended December 31, 2010. The net loss is higher than cash used in operating activities by $12.6 million. The primary drivers for the difference are adjustments for non-cash charges such as stock-based compensation of approximately $0.7 million, amortization of note discount and debt issuance cost of approximately $0.8 million, issuance of $3.5 million worth of common stock in lieu of cash milestone payments due to Eli Lilly and Shionogi & Co., Ltd., the conversion of approximately $0.3 million of accrued interest into shares of common stock upon conversion of certain convertible promissory notes, mark-to-market adjustments relating to warrant and derivative liability of $3.8 million, and increase in net operating assets and liabilities of approximately $3.6 million.

Net cash used in operating activities was approximately $17.2 million for the year ended December 31, 2009. The net loss is higher than cash used in operating activities by $5.0 million. The primary drivers for the difference are adjustments for non-cash charges such as depreciation of $0.02 million, stock-based compensation of approximately $0.3 million and amortization of note discount and debt issuance cost of approximately $0.2 million, a decrease in current liabilities of approximately $0.6 million primarily due to payments made to CROs for the achievement of clinical milestones and a $5.0 million license fee payment made to Amgen.

Cash flows from investing activities

Net cash provided by investing activities was approximately $20.2 million for the year ended December 31, 2011 and was driven by the maturities of short-term investments of $26.3 million during the period, offset by purchases of short-term investments of $4.7 million and property and equipment of $1.3 million.

Net cash used by investing activities was $23.4 million for the year ended December 31, 2010 and was primarily driven by the purchase of short-term investments during the year.

Net cash provided by investing activities for the year ended December 31, 2009 was not significant.

Cash flows from financing activities

Net cash provided by financing activities was approximately $78.4 million for the year ended December 31, 2011 and consisted primarily of net proceeds of approximately $24.7 million received from the issuance of notes payable to Hercules in March 2011, and approximately $54.0 million in net proceeds received from the equity offering in June 2011.

Net cash provided by financing activities was approximately $87.5 million for the year ended December 31, 2010 and consisted of proceeds of $61.2 million received from the issuance of common stock from our IPO, proceeds of $29.6 million received from the issuance of common stock and warrants in connection with the September private placement offering, and proceeds of approximately $0.2 million received from the exercise of stock options and issuance of common stock through our ESPP, offset by approximately $3.5 million of issuance cost paid during the period.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Overview

We are a biopharmaceutical company focused on developing and commercializing products to treat serious diseases associated with inflammation and autoimmune diseases. Our primary product candidate, blisibimod, targets elevated levels of B-cell activating factor, or BAFF, which has been associated with a variety of B-cell mediated autoimmune diseases, including systemic lupus erythematosus, or lupus, lupus nephritis, vasculitis, rheumatoid arthritis, idiopathic thrombocytopenia purpura, IgA nephropathy, and others.

In March 2012, an independent data safety monitoring board recommended stopping our VISTA-16 clinical study for varespladib due to a lack of efficacy that could not be reasonably overcome in the remainder of the trial. The chief reason was the inability of VISTA-16 to detect a statistically significant benefit of the drug on the prespecified primary and secondary endpoints even if the study continued to its scheduled termination with a proposed expanded sample size. The same data reviewed by the DSMB were subsequently brought in-house and examined by a committee of medical and drug safety professionals. In addition to reviewing the primary endpoint data, this review included unblinded review of demographics, baseline characteristics, laboratory results, concomitant medications, treatment emergent adverse events (AEs), and serious adverse events (SAEs). We implemented an organizational restructuring plan that lowered operating expenses through headcount reductions and the elimination of certain vendor activities. We continue to modify work orders with key vendors to ensure wind-down activities are efficient, while still maintaining patient safety as a top priority. We will continue to incur costs associated with these activities, but we do not expect them to be significant beyond the current quarter. We have reallocated our remaining resources to other potential development programs and product portfolio efforts.

In June and July 2012, we announced results from our Phase 2b PEARL-SC clinical study in patients with systematic lupus erythematosus (SLE). In September 2012, we completed the End of Phase 2 discussions with the FDA and announced our intention to advance blisibimod into Phase 3 clinical trials for patients SLE. Our Phase 3 study (CHABLIS-SC1) will be multicenter, placebo-controlled, randomized, double-blind studies designed to evaluate the efficacy, safety, tolerability and immunogenicity of blisibimod in patients with clinically active SLE (SELENA-SLEDAI > 10) who have not achieved optimal resolution of their disease with corticosteroid use. Patients will be treated in the trial for 52 weeks after which they may have the option to receive additional treatment as part of an open-label, long-term, follow-up safety study.

We were incorporated and commenced operations in September 2004. Since our inception, we have generated significant losses. As of September 30, 2012, we had an accumulated deficit of $251.5 million. As of the date of this filing, we have never generated any revenue and have generated only interest income from cash and cash equivalents and short-term investments. We expect to incur substantial and increasing losses for at least the next several years as we pursue the development and commercialization of our product candidates.

To date, we have funded our operations through equity offerings, private placements of convertible debt and debt financings, raising net proceeds of approximately $260.0 million. We will need substantial additional financing to continue to develop our product candidates, obtain regulatory approvals and to fund operating expenses, which we will seek to raise through public or private equity or debt financings, collaborative or other arrangements with third parties or through other sources of financing. We cannot assure you that such funds will be available on terms favorable to us, if at all. In addition to the normal risks associated with development-stage companies, we may never successfully complete development of our product candidates, obtain adequate patent protection for our technology, obtain necessary government regulatory approval for our product candidates, or achieve commercial viability for our product candidates. In addition, we may not be profitable even if we succeed in commercializing our product candidates.

Revenue

To date, we have not generated any revenue. We do not expect to generate revenue unless or until we obtain regulatory approval of, and commercialize our product candidates or in-license additional products that generate revenue. We intend to seek to generate revenue from a combination of product sales, up-front fees and milestone payments in connection with collaborative or strategic relationships and royalties resulting from the licensing of the commercial rights to our intellectual property. We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the nature, timing and amount of milestone payments we may receive upon the sale of our products, to the extent any are successfully commercialized, as well as any revenue we may receive from our collaborative or strategic relationships.

Research and Development Expenses

Since our inception, we have focused our activities on our product candidate development programs. We expense research and development costs as they are incurred. Research and development expenses consist of personnel costs, including salaries, benefits and stock-based compensation, clinical studies performed by contract research organizations, or CROs, materials and supplies, licenses and fees and overhead allocations consisting of various administrative and facilities-related costs. Research and development activities are also separated into three main categories: licensing, clinical development and pharmaceutical development. Licensing costs consist primarily of fees paid pursuant to license agreements. Historically, our clinical development costs have included costs for preclinical and clinical studies. We expect to incur substantial clinical development costs for our Phase 3 development program for blisibimod. Pharmaceutical development costs consist of expenses incurred relating to clinical studies and product formulation and manufacturing.

We expense both internal and external research and development costs as incurred. We have been developing product candidates in parallel, and we typically use our employee and infrastructure resources across several projects. Thus, some of our research and development costs are not attributable to an individually named project, but rather are allocated across our clinical stage programs. These unallocated costs include salaries, stock-based compensation charges and related “fringe benefit” costs for our employees (such as workers compensation and health insurance premiums), consulting fees and travel.

Our expenses related to clinical studies are based on estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation and vary from contract to contract and may result in uneven payment flows. Generally, these agreements set forth the scope of work to be performed at a fixed fee or unit price. Payments under the contracts depend on factors such as the successful enrollment of patients or the completion of clinical study milestones. Expenses related to clinical studies generally are accrued based on contracted amounts and the achievement of milestones such as number of patients enrolled. If timelines or contracts are modified based upon changes to the clinical study design or scope of work to be performed, we modify our estimates of accrued expenses accordingly on a prospective basis.

None of our product candidates have received U.S. Food and Drug Administration, or FDA, or foreign regulatory marketing approval. In order to grant marketing approval, the FDA or foreign regulatory agencies must conclude that clinical data establishes the safety and efficacy of a product candidate and that the manufacturing facilities, processes and controls are adequate. Despite our efforts, our product candidates may not offer therapeutic or other improvement over existing, comparable drugs, be proven safe and effective in clinical studies, or meet applicable regulatory standards.

As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our clinical development activities or when and to what extent we will receive cash inflows from the commercialization and sale of an approved product candidate, if ever.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation for employees in administration, finance and business development. Other significant costs include professional fees for legal services, including legal services associated with obtaining and maintaining patents. We will continue to incur significant general and administrative expenses as a public company, including costs for insurance, costs related to the hiring of additional personnel, payment to outside consultants, lawyers and accountants and complying with the corporate governance, internal controls and similar requirements applicable to public companies.

Other Income (Expense)

Other income/expense consists of interest earned on our cash, cash equivalents and short-term investments and realized gains and losses resulting from exchange rates fluctuation on foreign currencies.

Interest Expense

Interest expense consists primarily of interest expense, amortization of note discount and note issuance costs, and charges recorded for an end-of-term payment associated with our notes issued under a Loan and Security Agreement with Hercules in March 2011.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates.

While our significant accounting policies are more fully described in the notes to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2011, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.

Contractual Obligations and Commitments

The Company has lease obligations consisting of an operating lease in connection with a sublease for our operating facility that commenced in October 2008 and expires September 2014, for approximately 7,800 square feet, through July 2011, and approximately 14,000 square feet, subsequent to July 2011, of office space, and office equipment leases that commenced in October 2007 and will expire in June 2013.

On March 25, 2011, the Company entered into a Loan Agreement with Hercules. Under the terms of the Loan Agreement, the Company borrowed $25.0 million at an interest rate of the higher of (i) 10.55% or (ii) 7.30% plus the prime rate as reported in the Wall Street Journal, and issued to Hercules a secured term promissory note evidencing the loan. The loan is secured by the Company’s assets, excluding intellectual property. The Company made interest only payments for the initial 15 months. Thereafter, the loan will be repaid in 30 equal monthly installments of approximately $1.0 million, at the initial interest rate. The Company will also be obligated to pay an end of the term charge of $0.9 million, which is being expensed over the term of the Loan Agreement using the effective interest rate method.

Off-Balance Sheet Arrangements

We do not currently have, nor have we ever had, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts.

Recent Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income , which requires an entity to present total comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements and eliminates the option to present the components of other comprehensive income as part of the statement of changes in members’ capital. There was no material impact on the Company’s financial statements as a result of the adoption of ASU No. 2011-05 in January 2012.

CONF CALL

Christopher P. Lowe - Chief Financial Officer, Chief Business Officer and Principal Accounting Officer
Great. Thank you, everyone, for joining us this morning. Welcome to Anthera's Third Quarter Earnings Conference Call. Yesterday, we issued a press release that provided the details of the company's financial results for the third quarter ended September 30, 2012, as well as an update on our corporate activities. This press release is also available on our website, as well as, for additional information, we have an updated corporate presentation, which is now available on our website as well, under the title Events and Presentations at www.anthera.com.

During the course of this conference call, we will state our beliefs and make projections and other forward-looking statements regarding future events and the future financial performance of Anthera. We wish to caution you that such statements or predictions and expectations and actual events or results may differ materially.

We refer you to Anthera's publicly filed SEC disclosure documents for a detailed description of the risk factors affecting our business, most recently our annual report on Form 10-K for the year ended December 31, 2011, and quarterly report on Form 10-Q for the quarter ended June 30, 2012. This document identifies the important risk factors that could cause our actual results to materially differ from our projections and other forward-looking statements. These risk factors include regulatory, operating expenses, intellectual property, clinical development and other risks relating to the business.

Joining me on the call today is Paul Truex, Anthera's Chief Executive Officer and President. During today's call, I will provide a brief update on our financial performance, and afterwards, Paul will provide everyone with a broader corporate update. We will then open the call to your questions.

So starting with our financial performance for the quarter, as expected, our total R&D expenses in the third quarter of 2012 were lower, at approximately $9.5 million for the quarter, compared to the second quarter of 2012, which was approximately $14.7 million. The primary driver is due to the completion of the PEARL-SC clinical study and the subsequent winding down of those clinically-related activities.

Looking at the G&A expenses for the third quarter 2012, they were slightly lower at $1.6 million, as compared to the second quarter of 2012, which was approximately $1.8 million. Again, this is our -- primarily due to our continued efforts to limit our overhead costs for business development, legal and accounting fees.

As of the end of the third quarter, we had approximately $42.5 million in cash, cash equivalents and short-term investments. I will now turn the call over to Paul, for a corporate update.

Paul F. Truex - Chief Executive Officer, President and Director
Thanks, Chris. Yesterday, as part of our quarterly earnings release, we disclosed additional results from the Phase IIb PEARL-SC clinical trial with blisibimod in patients with Systemic Lupus Erythematosus or SLE. Data from the PEARL study and recent feedback from the FDA, which I will discuss shortly, provide us with a clear path in Phase III to evaluate blisibimod in patients who are not responding to corticosteroid use and continue to have autoantibody-positive clinically active SLE, defined as a SELENA/SLEDAI score of greater than 10 at baseline.

Previous results from the study indicate that in this population, the patients who are also receiving corticosteroid use displayed a statistically significant treatment effect on the predefined SRI-8 end point, which I'll discuss in a minute, at week 8, at week 16 through week 24 time points when treated with 200 milligrams weekly blisibimod compared to placebo.

Over the past quarter, we have continued to further analyze the data we garnered from PEARL. We have gained additional confidence from the results of PEARL when we look at the details of the SRI-8 response index. Specifically, when we eliminate scores for biomarker improvement, such as dsDNA improvements, improvements in complement, we find the treatment benefit is substantially maintained, indicating to us that 85% of the SRI-8 response was derived from clinical improvement such as improvements in joint pain, rash and oral lesions.

This clinical effect is reinforced by a 1.6-fold improvement in the time to severe flare compared to placebo. In fact, the majority of severe flares seen in the placebo group during the PEARL study occurred shortly after patient steroid treatments were restricted per the protocol.

Additionally, we also found a significant improvement in proteinuria over 24 weeks with the 200-milligram weekly dose of blisibimod. These decreases in proteinuria result in near normalization of the protein creatinine ratio compared to baseline in patients who received blisibimod. This is an important marker of renal function. Additional data from the PEARL-SC clinical study can be found, as Chris mentioned, on our corporate -- on our website via our corporate presentation under Events and Presentation.

Regarding our interactions with the FDA in Q3, we discussed these data with the agency, and are pleased not only with the outcome but with the confidence we garnered from our discussion. The agency has confirmed that the primary endpoint of SRI-8, the value of it at a 52-week time point is acceptable for a registration studies. The SRI-8 is a defined -- is defined as patients who respond to treatment and achieve an improvement in the SELENA/SLEDAI index of equal to or greater than 8 points. No new BILAG A or BILAG B -- 2 BILAG B organ domain scores and no increase in Physician's Global Assessment of greater than 0.3 on a 3-point scale.

Both CHABLIS studies will enroll approximately 400 patients and will be multi-centered, randomized, double-blind placebo-controlled studies designed to evaluate the efficacy, safety, tolerability and the immunogenicity of blisibimod in patients with clinically active SLE. Again, this is defined as patients with SELENA/SLEDAI of greater than 10 who are nonresponsive to corticosteroid therapy. We expect the CHABLIS-SC1 clinical trial to begin enrollment in some of the same geographies we use for PEARL-SC in Q1 of 2013.

As well, let me provide a quick update on our manufacturing progress. The FDA has confirmed the comparability of the drug substance manufactured by our contract manufacturer to the previously manufactured drug used in our Phase I and Phase II clinical studies as well as our GLP toxicity studies. We are pleased that the GMP manufacturing campaigns for prefilled syringes for Phase III has been completed successfully, and batches are currently undergoing release testing. Provided the product passes all specifications, we anticipate shipping these syringes to clinical sites for the CHABLIS-SC1 trial in Q1 of 2013.

Operator, at this time, we'll be happy to take any -- or a few questions.

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