Ampio Pharmaceuticals, Inc.

Thank you and welcome to the Ampio Pharmaceuticals 2021 Second Quarter Earnings Results and Corporate Update Webinar. As a reminder, this call is being recorded and all listeners will be in 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 can submit your question online in the Ask a Question portion of your screen. At this time, I'd like to turn the floor over to Mr. Dan Stokely. Dan, please go ahead.

Thank you very much, Catherine. I hope everyone's having a great day. It's our pleasure, me and the rest of the Amphio executive management team, to be present here today. And we'd like to thank each one of you for attending our second quarter 2021 financial results and business update call, either via the phone or 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 Amphio, who will be presenting and or 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, who's 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, which are not going to be applicable today, but including also any accompanying 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 other words or terms of similar meaning. Risks and uncertainties that could cause our actual results. to differ materially from those set forth in any forward-looking statements included but are not limited to the matters listed under the heading Risk Factors in our annual report on Form 10-K for the year ended December 31st, 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. Finally, statements and information in this presentation, including forward-looking 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. Now that we have all this out of our way, I'd like to discuss our financial results for the second quarter period ending June 30th, 2021. Cash and cash equivalents totaled $20.5 million on June 30th, 2021 compared to $17.3 million on December 31st, 2020. The increase of $3.2 million is primarily attributable to net proceeds that the company received from the utilization of our at-the-market or ATM equity offering of about $9.5 million, which represents about 5.9 million shares at an average stock price of $1.69 a share, which was partially offset by cash required to fund the business operations, totaling $6.5 million. We recognize a net loss of $3.6 million for the three months into June 30th, 2021, compared to a net loss of 2.7 million for the three months into June 30th, 2020. The net loss during the 2021 quarter was primarily attributable to operating expenses of 3.7 million and was partially offset by a non-cash modest derivative gain of 0.1 million. The net loss for the 2020 quarter was primarily attributable to operating expenses of $2.6 million and a non-cash derivative loss of about $0.7 million, partially offset by the gain the company recognized from the forgiveness of its PPP loan of $0.5 million. Operating expenses increased $1.1 million for the 2021 quarter as compared to the 2020 quarter, primarily due to a $1.2 million increase in research and development costs, partially offset by a $0.1 million decrease in G&A costs. We recognize the net loss of $7.2 million for the six months ended June 30th, 2021, compared to a net loss of $7.9 million for the six months ended June 30th, 2020. The net loss during the 2021 period were primarily attributable operating expenses of $7.5 million. That was partially offset by a derivative gain of $0.2 million. And the net loss during the 2020 period was primarily attributable operating expenses of $8.6 million, partially offset by gain realized from the forgiveness of the PPP loan of $0.5 million and a non-cast derivative gain of $0.2 million. The operating expenses decreased $1.1 million for the 2020 period compared to the 2021 period due to a $0.8 million decrease in research and development costs and a $0.3 million decrease in G&A costs. Moving on, research and development expenses for the three-month period ended June 30, 2021 were $2.3 million which reflects an increase of $1.2 million or 103% from already expenses for the same period in 2020, and which were consistent with expenses for the first quarter of 2021. The increase of $1.2 million compared with second quarter 2020 is primarily due to the incremental costs incurred from contracting CRO efforts to clean, scrub, and secure the AP 013 database In addition, during the current period, the company incurred incremental costs associated with several new trials, the AP-017, 018, and 019 trials, and preclinical research studies that were not present in the second quarter of 2020. R&D expenses for the six months ended June 30, 2021, decreased 0.8 million, or 15% from R&D expenses for the six months ended June 30, 2020. The decrease is primarily attributable to an overall decrease in clinical trials sponsored research expenses in the current period, totaling $1.4 million, which was attributable to the pause of the APO13 study in April of 2020, which was partially offset by incremental costs incurred during the current period associated with the the CRO efforts that were aligned to clean, scrub, and secure the AP-013 database, and also from incremental costs associated with new trials that were started in the current period. G&A expenses for the three months ended June 30, 2021, decreased $0.1 million. or 6% from total G&A expenses for the three months ended June 30th, 2020. And for the six months ended June 30th, 2021, the expenses decreased 0.3 million or 10% from G&A expenses for the six months ended June 30th, 2020. For both periods, the decrease is attributable to an overall decrease in the legal costs. as a result of the dismissal of the securities class action and derivative cases during the third quarter of 2020. Total shares of common stock outstanding were 200,070,419 shares on June 30, 2021, compared to 193,378,996 on December 31, 2020. The increase during the six-month period ending June 30, 2021, is attributable to A, issuance of shares under the ATM equity program, totaling approximately 5.9 million shares, and some nominal issuance of, or surrendering the warranted stock options totaling 5.9 million shares. And lastly, based on our current operating plans and expected access to additional equity financing, ABBEO expects to have cash and cash equivalents, along with access to external sources of liquidity, sufficient to fund research and development programs and business operations through the fourth quarter of 2022. And now I'll turn it over to Mike Macaluso, ABBEO's president and CEO, who will provide a corporate update on the overall business operations.

Thanks, Dan. I mean, I understand there's pressure on our sector and more personally on our stock, Let me share some positive truth on what's going on here. What is the status of AP013 Oak phase three study? Consistent with our ongoing public communications, the Oak trial was paused in April 2020 because of COVID-19. Since then, we have worked diligently with the FDA to gain better understanding of our viable options to preserve the study results to date, which include keeping the special protocol assessment or SPA in place. One, by adding more patients after the pandemic is over, or two, implementing the sensitivity analysis, which is basically a mathematical formula to minimize the impact of COVID-19. I have gone back and forth on which option to select and the circumstances and timing associated with that decision. We have decided to proceed forward and unblind the study, utilizing the sensitivity analysis to eliminate any bias from the pandemic. And I'll let Holly give you more details on this in a few minutes. The next question is timing. When are we going to do this? We have decided to do this as soon as the data has been properly cleaned and validated, meaning all queries have been addressed and answered, and the patient response data is properly reflected in the database. That's a requirement of the FDA. Ordinarily, this process takes several months. The ongoing pandemic has continued to add complexity towards completing this process, including the collection of data. After spending, already spending many months and incurring considerable costs, we expect to have this quality control or Clean data validation process finished later this quarter. And I'll give you a better clarity of the timing of the annual meeting, but hopefully August, early September will be done with that, but I'll update at that time. Validation process finished later this quarter with results released to the public shortly thereafter. Those results will be unblinded and shared with the public. Interested parties, who would that be? Potential partners. and later with the FDA. Of course, the FDA requires much more detailed investigative paperwork. All right, so just, again, to clarify, again, we will run the clean data through the mathematical filter, and at that point, the blinded data will be unblinded, and we'll share it with the public. I think that's pretty clear. Okay, now let's move to the phase two inhaled Ampion study, AP019. Recall several weeks ago we announced that we received regulatory approval to expand the enrollment of our AP019 Phase 2 study to India. As noted in the press release, India is not a separate trial, but rather an extension of the inhalation study that has already started in multiple hospitals in the United States. Some of you have been asking me, Mike, what's taking so long? Of course, I ask the same question every day. but in actuality, the response is simple. It's not taking any excessive length of time. India, similar to the United States, has very lengthy regulatory process similar to that of the U.S. as it relates to getting a hospital clinical site under contract, which includes receiving approval for clinical trials to be conducted, as well as regulating the sale and importation of drugs for the use of clinical trials from the Drug Controller General in India. Like the U.S., this process can take four, five, six months to get completed. The good news is we started this months and months ago, including the appropriate regulatory and import filings. In addition, we also needed agreement from the FDA to accept the clinical data from India for inclusion in the overall clinical trial results so that we could apply it to an emergency use application and eventually approval before we started the process. So before we could even think about India, we had to get the FDA to accept the clinical data we received there. We received confirmation in writing from the FDA to proceed. We currently expect to run this trial in seven to 10 hospital sites in India and finish enrollment, even with a slow start, faster than we would have if we focused the entire trial in the United States. So the purpose of going to India, enrolling 7 to 10 hospitals, will give us a result much quicker than if we just did it in the United States. As previously stated, the Phase II inhalation study is already treating patients. So the India study is an extension of what we're already doing, as are the Phase II IVs. and the long hauler studies. All these previously referenced studies are listed on clinicaltrials.gov. On clinicaltrials.gov, we estimated completion by December of this year. Now, obviously, with the addition of those sites, it could go sooner or take longer. We'll update that as we go along, but as right now, we'll sort of stick with that. Also, Amplio recently engaged a global strategic advisory firm to assist us with our partnering objective. Consistent with previous communications, we continue to be engaged in ongoing discussions and we'll expect these discussions to continue. And this is a new group, by the way, a very scientifically focused group. This is not the group we had before helping us, and they will focus on oak, of course, but also on OA and also inflammatory conditions, or to simplify the whole platform and the turnkey opportunity. So this is a new group for us to help us do what we're trying to do. One of the questions I continually get asked is, what is the expected timeframe to find the right partner or set of partners from both a domestic and global perspective? We asked the experts that are engaged in seeking and executing the partnerships, and I received basically the same consistent response as I would expect. Simple, right? However long it takes to find the right partner that see the benefit of the platform and provides a deal structure that we're willing to accept. And while we're going through this partnering process or discussions, we continue to add evidence of the platform potential so that there's no slowing down. So I'll let Holly sort of update you more clinically on what's going on and specifically with the trials, and then I'll pick up at the end.