Ampio Pharmaceuticals, Inc.

Thank you, and welcome to the NPO Pharmaceuticals first quarter 2021 earnings result and business update webinar. As a reminder, this call is being recorded, and listeners will be on a listen-only mode. If you would like to ask a question, please dial star 1 on your telephone keypad. If you are accessing this call by webinar, you may submit your questions online in the ask a question portion of your screen. At this time, I would like to turn the call over to Mr. Dan Stokely, CFO. Dan, please.

Yeah, thank you very much. And I hope everyone's having a great day. It's our pleasure, me and the rest of the MPO executive management team to be present today. And we'd like to thank each one of you for attending our first quarter 2021 financial results and business update call, either via phone or the webcast. Prior to reading the Safe Harbor forward-looking statement, I'd like to introduce you to the members of the executive management team of Ampio Pharmaceuticals, who will be both presenting and participating on the call today. First here with us at the company headquarters in Englewood, Colorado, is Mr. Mike Macaluso, the Chairman and Chief Executive Officer. We also have present Dr. David Baror, Director and Founder, Holly Cherevka, the company's Chief Operating Officer, and me, Dan Stokely, the Chief Financial Officer. I'd like to start out by first reading our safe harbor statement. These slides and materials, including any company and oral presentation, may contain forward-looking statements about our business. You should not place undue reliance on forward-looking statements as these statements are based upon our current expectations, forecasts, and assumptions and are subject to significant risks and uncertainties. These statements may be identified by words such as may, will, should, could, expect, intend, plan, anticipate, believe, estimate, predict, potential, forecast, continue, or the negative of these terms or words or terms of similar meaning. Risk and uncertainties that could cause our actual results to differ materially from those set forth in any forward-looking statements include, but are not limited to, the matters listed under the heading risk factors, in our annual report on Form 10-K for the year into December 31, 2020, which is on file with the Securities and Exchange Commission, as well as other risks detailed in our subsequent filings with the Securities and Exchange Commission. These reports are available at www.sec.gov. Statements and information in this presentation, including forward-clicking statements, speak only as of the date they are made. or provided unless earlier data is indicated, and we do not undertake any obligation to publicly update any statements or information, including forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. In addition, I'd like to let all of you know that effective immediately and until further notice, we intend to disseminate non-financial information and information not requiring the issuance of an 8K filing via the media communication services provided by Benzinga, which we feel will provide a much stronger band of coverage to our current and future investor base. Now that we have all of that out of our way, I'd like to touch briefly on our financial results for the first quarter ended March 31, 2021. Cash and cash equivalents total $15.8 million on March 31, 2021, compared to $17.3 million on December 31, 2020. The decrease of $1.5 million is primarily attributable to cash use to fund the operating activities for the period of $4.1 million, partially offset by net proceeds received from the utilization of our at-the-market or ATM equity offering and warrant exercises totaling $2.6 million. The majority of the proceeds were received from the ATM. The research and development expenditures for the first quarter period were $2.3 million compared to $4.3 million for the same period in 2020, and slightly higher than the fourth quarter of 2020, totaling $2.1 million. Of the total decrease from the first quarter period of 2020, a total of 2 million, the majority was primarily due to the overall decrease in clinical trial and sponsor research-related expenses related to the AP-013 or OAK trial being temporarily paused in April 2020, and whereby we have subsequently incurred nominal support and database maintenance-related costs. And this was partially offset by $1.1 million of expenses in the current quarter related to the production of clinical trial product for the upcoming Phase II inhaled Ampion and intravenous Ampion studies. That totaled about $0.3 million, as well as CRO support services related to the finalization and scrubbing of the AP013 clinical trial product. Patient database totaling $0.6 million. General and administrative expenses for the first quarter period ending March 31, 2021 were $1.5 million compared to $1.8 million for the same period in 2020. The decrease is primarily due to the decrease in professional fees as a result of the decrease in legal costs. Other income was approximately $200,000 for the first quarter compared to $800,000 for the same period in 2020. Other income relates directly to the warrant derivative gain recorded for the investor warrants as a result of warrant exercises during the first quarter, which reduced the liability and was partially offset by the current period increase in stock prices. Net loss for the first quarter was $3.7 million, or two cents per share, compared to a net loss of $5.2 million, or $0.04 per share, for the same period in 2020. The lower net loss is primarily attributable to the reduction in clinical trial and sponsor-related research expenses, again, which was partly offset by the reported derivative gain in the prior quarter, and total shares of common stock Outstanding were $195,689,128 on March 31, 2021, compared to $193,378,996 on December 31, 2020. And based on our current operating plans, projections, and expected access to equity financing, Ampio expects to have cash and cash equivalents, along with access to external sources of liquidity, sufficient to fund research and development programs in the business operations through the second quarter of 2022. And now I'll turn it all over to Mike Macaluso, AMPIO's president and CEO, to provide an update on the overall business operations, including the product development pipeline. Mike?

Thanks, Dan. So what have we been doing since last we spoke? I believe that was early March of this year. My answer to that would be I suggest we've been improving. So what does Ampio Pharmaceuticals do? And does Ampio only treat osteoarthritis of the knee? I suggest I do not believe that statement. I believe Ampion can treat any joint, including but not limited to the hand, hips, and shoulders. I believe it will even work better in those other joints because they are under less stress than the knee. If this statement is true, then we are an osteoarthritis company which is far more valuable than an osteoarthritis of the knee company. Is Ampio a COVID company? No, I don't think that either. Ampio does not attempt to cure COVID, nor do we make vaccines. We treat the inflammation created by the immune response to the COVID virus. Ampion is agnostic and, as such, is unbiased whether the inflammation is caused by the virus that any other of the 6,000 or so mutations of the virus are what the cause of the inflammatory response is. So Amphion treats inflammation, not the virus. But won't COVID disappear soon if we focus too strongly on that? Not according to this Center of Disease Control or Nature magazine or Nature journal. We will live with this virus or mutations of this virus for many, many years to come. Pfizer on BBC last night confirmed this statement. Herd immunity will not be the solution either, in part because of the mutation. And in the research published by Nature Journal, it used Israel as an example of this. Even though Israel has vaccinated the majority of their population, The surrounding countries have vaccinated less than 2% of their population, and we live in a global and very mobile economy. The India pandemic is dealing with a double mutation of the virus that many suggest may be impervious to the current vaccines. How long will that double mutation be confined to just India alone? That's an interesting question. One last point. Always follow the money. If the virus will soon be a thing of the past, why are pharmaceutical companies continuing to make this virus a high-level priority and continue to invest billions in the expansion of vaccine manufacturing capacity? Then there is a long hauler or long COVID complications, which if you do not die from the virus, could be worse than the virus itself. There are also complications with the vaccine, which may or not become a problem in the future. A number of years ago, Dr. Barora and I made a trip to New York to meet with the head of an international healthcare, very large and prestigious bank. He had great credentials. He was an MD, PhD, and MBA. We asked him what we should do to maximize Ampio. He said simply, develop Ampion and nothing else. Make it a platform drug. and manufacture it cost-effectively. A year or so ago, before the pandemic shut down, we were engaged in meetings with various large pharma and specialty pharma organizations from all over the world. I wanted to talk about osteoarthritis, and they wanted to talk about oak. I thought it would be a very logical step to suggest Amphion would work in every joint. They wanted to focus only on the evidence. Then the pandemic got even worse. We always felt that we had to become a better company. Just surviving the pandemic would not be good enough. We had to improve the public image of Ampion as not a biologic with a narrow or focused range of therapeutic benefit, but rather as a platform biologic which can provide a broad range of therapeutic benefit toward various inflammatory diseases, many of which have limited or no treatment options. Our story? Our focus, our presentation to partners was too narrow, and the world was rapidly changing. So we spent the past 12 months working to correct this. During this time, now we are completing three animal studies. We never even accomplished one before. We reinstated and expanded focus research because that is a key to our partnering. We completed an IV study with excellent results. We completed an inhalation study with even better results. We submitted multiple large proposals to the FDA on the paused oak study. Now we have started a second IV study, both in the United States and Israel. We have started a second inhalation study, which we may expand into India. We are talking with people from India as we are speaking to you today. We started a long haul of study to address the after effects of the virus, which will begin as soon as the IRB agrees to the clinical endpoints. We have expanded our manufacturing capabilities to include IV bags and flip cap vials for the nebulizer to go along with vials for inter articular injections. Two more animal studies are will begin very shortly. We entered into a collaboration with a very prominent U.S.-based children's hospital to study and address rare and incurable diseases, where steroids are the only current treatment option. We also entered into a collaboration to address inflammatory and incurable kidney disease, which will be the focus of one of our upcoming animal studies. Look, there's a lot more that I could get into, but you get the picture. We had to transition. We had to become better. We had to have more to discuss with pharma, and I believe we have. We wanted our future meetings with potential partners to be a lot more interesting and valuable than they ever were before. We had our first new meeting yesterday, and many more will follow, and we have a great group of people to help support us in this initiative. Back to Oak for a minute. The recent FDA guidance provided us with options that would keep the SPA in place. That's important. But which option do we choose? I want our partner, not a potential partner, our partner to make that decision. That decision will affect the timing, marketing, label, and pricing of the drug. We never intended to file the BLA for Ampion ourselves. We never intended to build a sales force. We never intended to build a commercial infrastructure. By the way, if pharma wants us to unblind the trial first and then they deal with the FDA, we are set up to do that quickly. We have started the process of cleaning the data, and even though we remain blinded, we're anxious to get it unblinded. I read recently that 85% of the trials that were interrupted still do not have an approved plan to move forward. That means billions of dollars that were spent are still sitting on the sideline waiting to figure out what to do. Getting the deal done is my 100% focus. I'm proud of how we managed to improve during the shutdown, the things we accomplished. We transitioned without reinventing anything. We are still going to talk with many of the same companies. We now have much more to offer. And a lot of the people need a safe therapeutic, so we think we're positioned very well. In order to maximize the value of the Ampion platform, we realize that we need to leverage the expertise and resources of a large strategic partner. I've asked Dr. Barora to explain why Ampion is different, why it is effective, not just using science and microbiology, but from a doctor-patient perspective. David, I turn it over to you.