Lpath Replaces Its Outside Auditor

Xconomy San Diego — 

Five days after its June 24 annual meeting, San Diego’s Lpath (OTC:LPTN) dismissed the accounting firm LevitZacks for undisclosed reasons, according to a recent SEC filing. The biotech had recommended retaining the accounting firm to shareholders.

In its SEC filing, Lpath noted that LevitZacks had expressed uncertainty about Lpath’s ability to continue as a going concern in audit reports for 2007 and 2008. On the other hand, Lpath also says that throughout that period—and until LevitZacks’ June 29th dismissal—there were no disagreements with its independent accounting firm “on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures.”

Geoffrey Plank of Liolios Group, a spokesman for Lpath, says the dismissal of LevitZacks wasn’t as abrupt as it appeared. Lpath decided to change accounting firms some time go, Plank says, but the company didn’t have a replacement auditor in place before its proxies were printed. So he says the company asked shareholders to approve LevitZacks.

The accounting firm had been Lpath’s auditor for nearly four years, and received $120,900 from Lpath in 2008.

Lpath said in its regulatory filing that it appointed the accounting firm of Moss Adams as its new auditor. Lpath had been using Moss Adams to audit the company’s use of federal grant funding. The company’s spokesman says Moss Adams is a larger firm with more experience in biotech and the selection of Moss Adams allows Lpath to consolidate its accounting functions “under one roof.” Plank also says Lpath was pleased with LevitZacks and remains on good terms with the firm. The head of LevitZacks could not be reached for comment at the firm’s San Diego office today. 

Lpath, which works on antibody drugs for cancer and other conditions, lost $11.5 million in 2008. The company had $6.7 million in cash at the end of the first quarter but could receive $39 million from partner Merck Serono later this year if an early stage test of a cancer drug is successful. Lpath shares closed today at $1.24, down 11 cents.