As of March 31, 2018,2019, the Company had $154.4$140.0 million in cash and cash equivalents, compared to $90.9$172.6 million in cash and cash equivalents as of December 31, 2017. On a pro-forma basis, adjusting for the net proceeds from the May 2018 royalty financing (see Note 5), the Company’s cash and cash equivalents as of March 31, 2018 were $279 million.2018. Based on the Company’s current operating plans and projections, management believesthe Company expects that availableits cash and cash equivalents areas of March 31, 2019 will be sufficient to fund operations for at least one year from the date this Quarterly Report on Form 10-Q is filed with the U.S. Securities and Exchange Commission (SEC). The Company was incorporated in 1989 as a Delaware corporation and reincorporated in California in 2012.SEC.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of the SECU.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 20172018 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017,2018, filed with the SEC on February 22, 2018.March 4, 2019 (the Form 10-K). The accompanying unaudited condensed consolidated financial statements include the accounts of La Jolla Pharmaceutical Company and its wholly-owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the condensed consolidated balance sheet as of the Company at March 31, 2018,2019, the condensed consolidated statementstatements of operations for the three months ended March 31, 20182019, the condensed consolidated statement of shareholder’s equity for the three months ended March 31, 2019 and the condensed consolidated statement of cash flows for the three months ended March 31, 2018. Estimates were made relating2019.

The preparation of the Company’s unaudited condensed consolidated financial statements requires management to useful lives of inventory, fixed assets, returnmake estimates and valuation allowances, impairmentassumptions that impact the reported amounts of assets, share-based compensation expenseliabilities, revenue and accruals for clinical studiesexpenses and researchthe disclosure of contingent assets and development expense.liabilities in the Company’s unaudited condensed consolidated financial statements and the accompanying notes. Actual results couldmay differ materially from thosethese estimates. Certain amounts previously reported in the financial statements have been reclassified to conform to the current year presentation. Such reclassifications did not affect net loss, shareholders’ equity or cash flows. The results of operations for the three months ended March 31, 20182019 are not necessarily indicative of the results to be expected for the full year or any future interim periods. The accompanying condensed consolidated balance sheet atas of December 31, 20172018 has been derived from the audited consolidated balance sheet atas of December 31, 20172018 contained in the above referenced Annual Report on Form 10-K.

Inventory is stated atDuring the lowerthree months ended March 31, 2019, there have been no changes to the Company’s significant accounting policies as described in the Form 10-K, except as described below.

The Company will continueCompany’s products are distributed in the U.S. through distributors and select wholesalers (collectively, customers) that resell its products to assesshospitals, the end users. The following table includes the percentage of net product sales and accounts receivable balances for the Company’s three major customers, each of which comprised 10% or more of its estimates of variable consideration as it accumulates additional historical data and will adjust these estimates accordingly.net product sales:

Basic net loss per share is calculated based onby dividing net loss by the weighted-average number of common shares outstanding excluding unvested restricted stock awards.during the period, without consideration of potential common shares. Diluted net loss per share is calculated based onby dividing net loss by the weighted-average number of common shares outstanding plus potential common stock equivalents.shares. Convertible preferred stock, stock options warrants and unvested restricted stock awardswarrants are considered potential common stock equivalentsshares and are included in the calculation of diluted net loss per share using the treasury stock method when their effect is dilutive. Common stock equivalentsPotential common shares are excluded from the calculation of diluted net loss per share when their effect is anti-dilutive. As of March 31, 20182019 and 2017,2018, there were 14.114.3 million shares and 11.414.1 million shares, respectively, of potential common stock equivalents,shares, which were excluded from the calculation of diluted net loss per share because their effect was anti-dilutive.

Recently AdoptedIn June 2018, the Financial Accounting Pronouncements

Restricted cash as of March 31, 2019 and December 31, 2018 represents a standby letter of credit for the Company’s building lease in lieu of a security deposit during the term of such lease. There is a requirement to maintain a $0.9 million of cash collateral cashin an account pledged as security for such letter of credit. Restricted cash as

On October 18, 2018, the Company effected a Company-wide realignment to increase its efficiency and focus on achieving its corporate goals. For the year ended December 31, 2018, total expense for these activities was $4.0 million, with $1.6 million included in research and development expense and $2.4 million included in selling, general and administrative expense. Total expense was comprised of $7.7 million for severance costs, offset by a $3.7 million reversal of non-cash, stock-based compensation expense related to forfeited, unvested equity awards. As of March 31, 2019, all severance costs had been paid. No expense for these activities was recorded for the Company’s credit card arrangementsthree months ended March 31, 2019.

On December 29, 2016, the Company entered into an agreement with BMR-Axiom LP to lease office and laboratory space as its corporate headquarters located at 4550 Towne Centre Court, San Diego, California (Lease) for a period of $0.2 million and10 years commencing on October 30, 2017. The Company has an option to extend the Lease for an additional 5 years at the end of the initial term.

The Company provided a standby letter of credit for the Company’s prior lease$0.9 million in lieu of a security deposit during the termdeposit. This amount will decrease to $0.6 million after year two of the lease term and decrease to $0.3 million after year 5 of $0.1 million.the lease term. As of March 31, 2019, $0.9 million was pledged as collateral for such letter of credit and recorded as restricted cash. The annual rent under the Lease is subject to escalation during the term. In addition to rent, the Lease requires the Company to pay certain taxes, insurance and operating costs relating to the leased premises. The Lease contains customary default provisions, representations, warranties and covenants. The Lease is classified as an operating lease.

In March 2018, the Company offered and sold 3,910,000 shares of common stock in an underwritten public offering at a price of $29.50 per share for gross proceeds of approximately $115.3 million. The Company received proceeds of approximately $109.8 million, net of approximately $5.5 million in underwriting commissions, discounts and other issuance costs.

The Company’sIn January 2019, the Company issued 782,031 shares of common stock option activity under its option plans forupon the three months ended March 31, 2018 was comprisedconversion of the following:

In this report, all references to “we,” “our,” “us,” “La Jolla” and “the Company” refer to La Jolla Pharmaceutical Company, a California corporation, and itsour subsidiaries, including La Jolla Pharma, LLC, on a consolidated basis.

ThereMore than 1 million Americans are affected by shock on an annual basis, with 1 in 3 patients being treated for shock in the intensive care unit. Distributive shock is the most common type of shock in the inpatient setting with approximately 800,000 distributive shock cases in the U.S. each year. Of these cases, an estimated 90% are septic shock patients. Approximately 300,000 patients do not achieve adequate blood pressure response with initialstandard-of-care vasopressor therapy (catecholamines and require additional therapy for low blood pressure. The Center for Disease Control estimates that approximately 250,000 people in the U.S. die each year from septic shock.vasopressin). The inability to achieve or maintain adequate blood pressure results in inadequate blood flow to the body’s organs and tissue and is associated with a mortality rate exceeding most acute conditions requiring hospitalization.

The analysis of the primary efficacy endpoint, defined as the percentage of patients achieving a pre-specified target blood pressure response, was highly statistically significant: 23% of the 158 placebo-treated patients had a blood pressure response compared to 70% of the 163 GIAPREZA-treated patients (p<0.00001). In addition, there was a consistent trend toward longer survival was observed:over the 28-day study period: 22% reduction in mortality risk through day 28 [hazard ratio=0.78 (0.57-1.07), p=0.12] for GIAPREZA-treated patients.

In this critically ill patient population: 92% of placebo-treated patients compared to 87% of GIAPREZA-treated patients experienced at least one adverse event, and 22% of placebo-treated patients compared to 14% of GIAPREZA-treated patients discontinued treatment due to an adverse event.

In June 2018, we announced that the Marketing Authorization Application (MAA) for GIAPREZA was validated by the EMA. Validation of the MAA confirms that the submission is complete and starts the EMA’s centralized review process. This followed our announcement in September 2017, an analysis from ATHOS-3, entitled “Baseline angiotensin levels and ACE effects in patients with vasodilatory shock treated with angiotensin II,” was presented during the 30th European Society of Intensive Care Medicine Annual Congress. The pre-specified analysis showed that a relatively low angiotensin II state (as measured by the ratio of angiotensin I to angiotensin II) predicted increased mortality in patients with vasodilatory shock, suggesting that a low angiotensin II state is a negative prognostic indicator of outcomes. Furthermore, the analysis showed a statistically significant treatment effect of GIAPREZA compared to placebo on mortality in these patients with a relatively low angiotensin II state (relative risk reduction of 36%; HR=0.64; 95% CI: 0.41-1.00; p=0.047).

LJPC-0118 is an investigational product for the treatment of 2018.severe malaria. The active pharmaceutical ingredient in LJPC-0118 was demonstrated to be superior to quinine in reducing mortality in patients with severe falciparum malaria infection in two randomized, controlled, clinical studies. Severe malaria is a serious and sometimes fatal disease caused by a parasite that commonly infects a certain type of mosquito, which feeds on humans. Symptoms include, but are not limited to: fever, chills, sweating, hypoglycemia and shock. Severe malaria is often complicated by central nervous system infections that may lead to delirium, which may progress to coma. Infections usually occur a few weeks after being bitten. In 2017, an estimated 219 million cases of malaria occurred worldwide, with an estimated 200 million of these cases occurring in the World Health Organization (WHO) African Region, and, in 2013, the global annual incidence of severe malaria was estimated to be 2 million cases. In 2017, an estimated 435,000 people died from malaria worldwide.

In March 2018,We plan to file an analysis, entitled “Outcomes in PatientsNDA for LJPC-0118 with Acute Kidney Injury Receiving Angiotensin II for Vasodilatory Shock,” was presented at the 23rd International Conference on Advances in Critical Care Nephrology AKI & CRRT 2018. The manuscript of this analysis, entitled “Outcomes in patients with vasodilatory shock and renal replacement therapy treated with intravenous angiotensin II,” was published online in Critical Care Medicine. The presentation and manuscript detail the outcomes of patients with acute kidney injury (AKI) and vasodilatory shock enrolledFDA in the ATHOS-3 studyfourth quarter of GIAPREZA. In this post-hoc analysis, the data from 105 AKI patients (GIAPREZA n=45; placebo n=60) requiring renal replacement therapy (RRT) at study drug initiation were analyzed. Survival through day 28 was 53% (95% CI: 38%-67%) for the GIAPREZA group compared to 30% (95% CI: 19%-41%) for the placebo group (p = 0.012). By day 7, 38% (95% CI: 25%-54%) of patients treated with GIAPREZA discontinued RRT compared to 15% (95% CI: 8%-27%) of patients treated with placebo (p = 0.007). Mean arterial pressure (MAP) response at hour 3 was achieved in 53% (95% CI: 38%-68%) of patients treated with GIAPREZA compared to 22% (95% CI: 12%-34%) of patients treated with placebo (p = 0.001).

LJPC-401, a clinical-stage investigational product, is our proprietary formulation of synthetic human hepcidin. Hepcidin, an endogenous peptide hormone, is the body’s naturally occurring regulator of iron absorption and distribution. In healthy individuals, hepcidin prevents excessive iron accumulation in vital organs, such as the liver and heart, where it can cause significant damage and even result in death. We are developing LJPC-401 for the potential treatment of iron overload, which occurs as a result of primary iron overload diseases such as hereditary hemochromatosis (HH), or secondary iron overload diseases such as beta thalassemia (BT), sickle cell disease (SCD) and, myelodysplastic syndrome (MDS). and polycythemia vera.

HH is a disease characterized by a genetic deficiency in hepcidin. HH is the most common genetic disease in Caucasians and causes liver cirrhosis, liver cancer, heart disease and/or failure, diabetes, arthritis and joint pain. There are no FDA approved therapies for HH and the current standard treatment for HH is a blood removal procedure known as phlebotomy.

Beta thalassemia,BT, SCD and MDS are genetic diseases of the blood cells that can cause life-threatening anemia and usually require frequent and life-long blood transfusions. These blood transfusions cause excessive iron accumulation in the body, which is toxic to vital organs, such as the liver and heart. In addition, the underlying anemia causes excessive iron accumulation independent of blood transfusions.

In 2015, the EMA Committee for Orphan Medicinal Products (COMP) designated LJPC-401 as an orphan medicinal product for the treatment of beta thalassemia intermedia and major. In 2016, the EMA COMP designated LJPC-401 as an orphan medicinal product for the treatment of SCD.

In September 2016, we reported positive results from a Phase 1 study of LJPC-401 in patients at risk of iron overload suffering from HH, thalassemia and SCD. In this study, single, escalating doses of LJPC-401 were associated with a dose-dependent, statistically significant reduction in serum iron. LJPC-401 was well-tolerated with no dose-limiting toxicities. Injection-site reactions were the most commonly reported adverse event and were all mild or moderate in severity, self-limiting and fully resolved.

In September 2016, we reached agreementLJPC-401 is currently the subject of two clinical studies, LJ401-HH01 in patients with the EMA on the design of a pivotal study of LJPC-401 for the treatment of beta thalassemiaHH and LJ401-BT01 in patients suffering from iron overload, a major unmet need in an orphan patient population. This study, which we refer to as LJ401-BT01, was initiated in December 2017. LJ401-BT01 is designed to enroll approximately 100 patients across 9 countries, including the U.S. Patients will be randomized 1:1 to receive either: (i) weekly subcutaneous injections of LJPC‑401, while continuing standard-of-care chelation therapy (LJPC‑401 treatment arm); or (ii) a continuation of standard-of-care chelation therapy only (observation arm). After 6 months of treatment, patients randomized to the observation arm will cross over to receive LJPC‑401 (plus standard-of-care chelation therapy) for 6 months, while patients randomized to the LJPC-401 treatment arm will continue with LJPC-401 (plus standard-of-care chelation therapy) for an additional 6 months (for a total of one year). The primary efficacy endpoint of this study is the change in iron content in the heart after 6 months, as measured by cardiac magnetic resonance imaging (MRI). If this study is successful, we would anticipate filing an MAA for LJPC-401 in Europe.BT.

In December 2017, we announced the initiation of LJ401-HH01, a Phase 2 clinical study of LJPC‑401 in patients with HH. LJ401-HH01 is a multinational, multicenter, randomized, placebo-controlled, double-blind, Phase 2 study that is designed to evaluate the safety and efficacy of LJPC-401 as a treatment for HH. Approximately 60 patients will be randomized to receive weekly subcutaneous injections of either LJPC‑401 or placebo for 12 weeks. The primary efficacy endpoint of the study is the change in transferrin saturation, a standard measurement of iron levels in the body and one of the two key measurements used to detect iron overload, from baseline to end of treatment. Secondary efficacy endpoints include: (i) the change in serum ferritin, the other key measurement used to detect iron overload, from baseline to end of treatment; and (ii) the requirement for and frequency of phlebotomy procedures used during the study.

For the three months ended March 31, 2018 and 2017 (in thousands):

Prior to approval by the FDA, approximately $0.6 million of GIAPREZA, primarily related to royalty, labeling, shipping and distribution costs. A portion of the costdirect material costs to manufacture GIAPREZA waswere recorded to research and development expense in 2017. As of March 31, 2019, inventory excludes approximately $0.2 million of manufacturing costs that were recorded to research and development expense prior to the approval of GIAPREZA by the FDA.FDA approval.

We are exposed to financial market risks, including changes in interest rates. There were no material changes to our market risks ina smaller reporting company, as defined by Rule 12b-2 under the three months ended March 31, 2018, when compared to the disclosuresSecurities and Exchange Act of 1934 and in Item 7A10(f)(1) of our Annual Report Form 10-K forRegulation S-K, and are not required to provide the year ended December 31, 2017, filed with the SEC on February 22, 2018.information under this item.