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Ampio Pharmaceuticals, Inc. (AMPE) SEC Filing 10-Q Quarterly report for the period ending Tuesday, March 31, 2020

SEC Filings

AMPE Quarterly Reports

Ampio Pharmaceuticals, Inc.

CIK: 1411906 Ticker: AMPE

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 16, 2020

AMPIO PHARMACEUTICALS, INC.

(Exact name of registrant as specified in Charter)

 

 

 

Delaware

001‑35182

26‑0179592

(State or other jurisdiction of
incorporation or organization)

(Commission File No.)

(IRS Employer Identification No.)

 

373 Inverness Parkway, Suite 200

Englewood, Colorado 80112

(Address of principal executive offices, including zip code)

(720) 437‑6500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange
on which registered

Common

AMPE

NYSE American

 

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)

Pre-commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))

Pre-commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b‑2 of the Securities Exchange Act of 1934.

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

Item 2.02 Results of Operations and Financial Condition.

On April 16, 2020, Ampio Pharmaceuticals, Inc. (the “Company”) announced the following related to its first quarter 2020 financial results:

Cash & Liquidity Position: The Company completed the first quarter period ended on March 31, 2020 (the “First Quarter”), with cash and cash equivalents totaling $2.4 million compared to $6.5 million at December 31, 2019.  

During the First Quarter, the Company entered into a Sales Agreement with two agents to implement an “at-the-market” (“ATM”) equity offering program under which the Company may issue and sell from time to time, at its sole discretion, shares of its common stock.  During the First Quarter, the Company raised gross proceeds totaling $682,000, which reflected the sales of 1.2 million shares of common stock at an average price of $0.58 per share.  In connection with the Sales Agreement, the Company paid the agents an aggregate recurring fixed commission totaling 4.0% of the gross proceeds (2.0% to each agent) from shares of common stock sold. In addition, the Company incurred non-recurring issuance costs, which included legal and auditor fees, related to the Sales Agreement totaling approximately $220,000.

The audit report on the Company’s financial statements for the fiscal year ended December 31, 2019 contained an explanatory paragraph indicating that there was substantial doubt about the Company’s ability continue as a going concern.  In order to address the going concern at the end of the First Quarter, the Company prepared an updated  projection through March 31, 2021, which reflects cash requirements for fixed, on-going expenses for the base level of business operations at an average cash burn rate of approximately $0.8 million per month. The Company is currently assessing the impact of the COVID-19 pandemic on the AP‑013 Phase III clinical study as it is not currently in a position to project the required liquidity needs for completion of the trial. Finally, as of March 31, 2020, the Company does not have a committed source of liquidity to meet its expected obligations for the next twelve months.  However, with the planned disciplined use of the ATM equity offering program, the Company expects to have reliable source of liquidity to fund a significant portion of its operations into first quarter of 2021.

Current Liabilities:  The Company ended the First Quarter with current liabilities totaling $4.5 million, which represents a nominal increase from $4.3 million for the period ended December 31, 2019.  

R&D Expenses: Research and development expenses for the First Quarter were $4.3 million, an increase of $2.7 million from $1.6 million for the same period in 2019. The increase was primarily attributable to incremental costs associated with the Company’s AP‑013 Phase III clinical study which commenced in June 2019 and, as such, was not reflected in 2019 period.

G&A Expenses: General and administrative expenses for the First Quarter were $1.8 million, an increase of $650,000 from $1.1 million for the same period in 2019. The increase was primarily attributable to an increase in legal and professional fees related to ongoing current litigation and government investigation matters.  In addition, during the First Quarter, the Company recognized an increase in commercial insurance expense primarily due to an increase in the Company’s D&O insurance premiums, which is consistent with increases covering the overall market for public biopharmaceutical companies.  Finally, stock-based compensation (non-cash expense) increased due to the issuance of stock options to certain employees.  

The Company ended the First Quarter with 160,022,119 shares issued and outstanding.

The information in this Item 2.02 is furnished solely pursuant to Item 2.02 of Form 8‑K. Consequentially, such information is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. Further, the information in this Item 2.02 shall not be deemed to be incorporated by reference into the filings of registrant under the Securities Act of 1933.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

AMPIO PHARMACEUTICALS, INC.

 

 

 

By:

/s/ Daniel G. Stokely

 

 

Daniel G. Stokely

 

 

Chief Financial Officer

Dated: April 16, 2020

 

 

 


The following information was filed by Ampio Pharmaceuticals, Inc. (AMPE) on Thursday, April 16, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: March 31, 2020

or

 

 

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    

Commission File No. 001‑35182


cid:image001.jpg@01CDF343.4BBAE3B0

AMPIO PHARMACEUTICALS, INC.

(www.ampiopharma.com)

NYSE American: AMPE

(Exact name of registrant as specified in its charter)

 

 

Delaware

26‑0179592

(State or other jurisdiction of
incorporation or organization)

(IRS Employer
Identification No.)

 

373 Inverness Parkway, Suite 200

Englewood, Colorado 80112

(Address of principal executive offices, including zip code)

(720) 437‑6500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common

 

AMPE

 

NYSE American

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act.

 

 

 

 

Large Accelerated Filer

Accelerated Filer

 

 

 

 

Non-Accelerated Filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes   ☐    No  ☒

As of April 30, 2020, there were 164,851,000 outstanding shares of Common Stock, par value $0.0001, of the registrant.

 

 

 

 

AMPIO PHARMACEUTICALS, INC.

FOR THE QUARTER ENDED MARCH 31, 2020

INDEX

 

 

 

 

 

Page

 

PART I-FINANCIAL INFORMATION

 

 

 

 

Item 1. 

Financial Statements (unaudited)

6

 

 

 

 

Condensed Balance Sheets as of March 31, 2020 and December 31, 2019 

6

 

 

 

 

Condensed Statements of Operations for the three months ended March 31, 2020 and the three months ended March 31, 2019 

7

 

 

 

 

Condensed Statements of Stockholders’ Equity (Deficit) for the three months ended March 31, 2020 and the three months ended March 31, 2019 

8

 

 

 

 

Condensed Statements of Cash Flows for the three months ended March 31, 2020 and the three months ended March 31, 2019 

9

 

 

 

 

Notes to Financial Statements

10

 

 

 

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

 

 

 

Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

32

 

 

 

Item 4. 

Controls and Procedures

32

 

 

 

 

PART II-OTHER INFORMATION

 

 

 

 

Item 1. 

Legal Proceedings

32

 

 

 

Item 1A. 

Risk Factors

32

 

 

 

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

33

 

 

 

Item 3. 

Defaults Upon Senior Securities

33

 

 

 

Item 4. 

Mine Safety Disclosures

33

 

 

 

Item 5. 

Other Information

33

 

 

 

Item 6. 

Exhibits

34

 

 

 

SIGNATURES 

35

 

 

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10‑Q contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this report, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements appear in a number of places, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements represent our reasonable judgment about the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts, and use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “should,” “plan,” “potential,” “project,” “will,” “would” and other words of similar meaning, or the negatives of such terms or other variations. These include, but are not limited to, statements relating to the following:

·

Projected operating or financial results, including anticipated cash flows used in operations;

·

Expectations regarding clinical trials for Ampion, capital expenditures, research and development expenses and other payments;

·

Our beliefs and assumptions relating to our liquidity position, including, but not limited to, our ability to obtain near-term additional financing;

·

Our beliefs, assumptions and expectations about the regulatory approval pathway for Ampion including, but not limited to, our ability to obtain regulatory approval for Ampion in a timely manner, or at all;

·

In the event that the we do not have redundant manufacturing capabilities, we may be forced to rely on third party manufacturers, if we receive regulatory approval; and

·

Our ability to identify strategic partners and enter into beneficial license, co-development, collaboration or similar arrangements.

 

Any or all of our forward-looking statements may turn out to be wrong. They may be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors including, among others:

·

Management has performed an analysis of our ability to continue as a going concern. In addition, our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern;

·

We have incurred significant losses since inception, expect to incur net losses for at least the next several years (assuming internal commercialization efforts) and may never achieve or sustain profitability;

·

We will need additional capital to fund our operations. If we do not obtain the capital necessary to fund our operations, we will be unable to successfully develop, obtain regulatory approval of, and commercialize Ampion and may need to cease operations;

·

We may be limited in our ability to access sufficient funding through any or a combination of public or private equity offerings, “at-the-market”/continuous equity offerings, or various types of debt financings;

·

We received an SPA agreement from the FDA relating to Ampion for the treatment of severe osteoarthritis of the knee (“OAK”). This SPA agreement does not guarantee approval of Ampion for that indication or any other particular outcome from regulatory review;

·

Our business is highly dependent on the success of Ampion. If Ampion does not receive regulatory approval or is not successfully commercialized, our business is likely to be harmed and we may need to cease operations;

·

Ampio has suspended enrollment in its Phase III clinical trial for treatment of severe OAK due to considerations relating to COVID-19 and is exploring options to enable it to complete the study. When the study is able to commence again, completion of the study is expected to be time-consuming, may require significant capital outlay and the outcome of the study cannot be predicted;

·

The suspension of enrollment in our Phase III clinical trial for treatment of severe OAK will likely result in increased costs to us and delay or prevent our ability to file a BLA with the FDA and gain approval to commercialize Ampion for treatment of severe OAK and to generate future revenues. We rely on third parties to

3

conduct our clinical trials and perform data collection and analysis, which may result in costs and delays that prevent us from successfully commercializing Ampion;

·

We currently, and from time to time in the future may, outsource portions of our internal business functions to third-party providers. Outsourcing these functions has significant risks, and our failure to manage these risks successfully could materially adversely affect our business, results of operations, and financial condition;

·

If we do not receive marketing approval for Ampion, we may not realize the investment we have made in our manufacturing facility, resulting in one or more future impairments that would likely result in a material charge to our operating expenses;

·

While we deem the likelihood of us utilizing hazardous materials to be minimal, in the unlikely instance we use hazardous and/or biological materials in a manner that causes injury or violates applicable law, we may be liable for damages or fines;

·

Even if we obtain marketing approvals for Ampion, the terms of approvals and ongoing regulation of our product may limit how we, or our collaborators, manufacture and market our product, which could materially impair our ability to generate revenue;

·

Ampion, for which we may obtain marketing approval in the future, could be subject to post-marketing restrictions or withdrawal from the market and we, and our collaborators, may be subject to substantial penalties if we, or they, fail to comply with regulatory requirements or if we, or they, experience unanticipated problems with our product following approval.  The expenses and costs we will incur to comply with FDA post approval requirements could limit our financial resources for other development activities;

·

If we do not achieve our projected development and commercialization goals in the timeframes we announce and expect, our business could be harmed, and our stock price may decline;

·

Even if collaborators with which we contract in the future successfully complete clinical trials of Ampion, our product may not be commercialized successfully for other reasons;

·

We might enter into agreements with collaborators to commercialize Ampion once we obtain regulatory approvals, which, if not successful, may adversely affect the sales of our product and our ability to generate revenues;

·

Ampion is regulated by the FDA, and as such, may subject it to direct / indirect competition sooner than anticipated;

·

We could face substantial competition from companies with considerably more resources and experience than we have, which may result in others discovering, developing, receiving approval for, or commercializing competing or alternative products before or more successfully than us;

·

Pending or future potential lawsuits or investigations could divert our resources, result in substantial liabilities and reduce the commercial potential of Ampion;

·

We may have difficulties obtaining and maintaining sufficient commercial, directors and officers and other insurance coverage at a cost that does not impose a material burden on the operational liquidity of the Company;

·

If Ampion is commercialized, we cannot give any assurance that it will be accepted by physicians, patients, third-party payors, or the medical community in general in a timely and cost-effective manner;

·

Government and third-party payor restrictions on pricing and reimbursement, as well as other cost-containment initiatives, may negatively impact our ability to generate sufficient operating profits if we obtain regulatory approval to market our product;

·

The approval process outside the United States varies among countries and may limit our ability to develop, manufacture and sell our product internationally. Failure to obtain marketing approval in international jurisdictions would prevent Ampion from being marketed in those jurisdictions;

·

Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain, and motivate qualified personnel;

·

The COVID-19 pandemic and other significant  business interruptions could have a material adverse impact on our ability to operate our business;

·

While we are not aware of any cybersecurity incidents, the cybersecurity landscape continues to evolve and our cyber risk is currently changed due to a majority of our work force working remotely during the COVID-19 pandemic. We may find it necessary to make further investments to protect our data and infrastructure for those or other reasons;

4

·

Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities;

·

Our ability to compete may decline if we do not adequately protect our intellectual property;

·

A dispute concerning the infringement or misappropriation of our intellectual property or proprietary information or the intellectual property or proprietary information of others could be time consuming and costly, and an unfavorable outcome could harm our business;

·

Pharmaceutical patents and patent applications involve highly complex legal and factual questions, which, if determined adversely to us, could negatively impact our patent position and our ability to generate future revenue;

·

The price of our common stock has been extremely volatile and may continue to be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock;

·

The price of our common stock may be vulnerable to manipulation;

·

If we cannot continue to satisfy the NYSE American listing maintenance requirements and other rules, our common stock may be delisted, which could negatively impact the price of our common stock for an indeterminable period of time;

·

Our shareholders ability to influence corporate matters is limited;

·

Anti-takeover provisions in our charter and bylaws and in Delaware law could prevent or delay a change in control of Ampio;

·

Increased costs associated with corporate governance compliance may significantly impact or operational liquidity and have an adverse impact on our results of operations;

·

We have no plans to pay cash dividends on our common stock; 

·

Our business, financial condition and results of operations may be materially adversely affected by global health epidemics, including, but not limited to, the recent and ongoing COVID-19 pandemic; and

·

There are no assurances that the Paycheck Protection Program (“PPP”) Loan will be forgivable in whole or in part.

 

In addition, there may be other factors that could cause our actual results to be materially different from the results referenced in the forward-looking statements, some of which are included elsewhere in this report, including, but not limited to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Many of these factors will be important in determining our actual future results. Consequently, no forward-looking statement should be relied upon. Our actual future results may vary materially from those expressed or implied in any forward-looking statements. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date they are made, and we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as otherwise required by applicable law.

This Quarterly Report on Form 10‑Q includes trademarks for Ampion, which are protected under applicable intellectual property laws and are our property. Solely for convenience, our trademarks and trade names referred to in this Quarterly Report on Form 10‑Q may appear without the ® or TM symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and trade names.

5

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AMPIO PHARMACEUTICALS, INC.

Condensed Balance Sheets

(unaudited)

 

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2020

    

2019

 

 

 

 

 

 

 

Assets

 

 

  

 

 

  

Current assets

 

 

  

 

 

  

Cash and cash equivalents

 

$

2,415,000

 

$

6,532,000

Prepaid expenses and other

 

 

1,020,000

 

 

1,718,000

Total current assets

 

 

3,435,000

 

 

8,250,000

 

 

 

 

 

 

 

Fixed assets, net

 

 

4,453,000

 

 

4,748,000

Right-of-use asset

 

 

959,000

 

 

1,003,000

Total assets

 

$

8,847,000

 

$

14,001,000

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

  

 

 

  

Current liabilities

 

 

  

 

 

  

Accounts payable and accrued expenses

 

$

4,214,000

 

$

4,025,000

Lease liability-current portion

 

 

265,000

 

 

259,000

Total current liabilities

 

 

4,479,000

 

 

4,284,000

 

 

 

 

 

 

 

Lease liability-long-term

 

 

1,142,000

 

 

1,210,000

Warrant derivative liability

 

 

1,233,000

 

 

2,064,000

Total liabilities

 

 

6,854,000

 

 

7,558,000

 

 

 

 

 

 

 

Commitments and contingencies (Note 6)

 

 

  

 

 

  

 

 

 

 

 

 

 

Stockholders’ equity

 

 

  

 

 

  

Preferred Stock, par value $0.0001;  10,000,000 shares authorized; none issued

 

 

 —

 

 

 —

Common Stock, par value $0.0001;  300,000,000 shares authorized as of 2020 and 2019; shares issued and outstanding - 160,022,000 as of March 31, 2020 and 158,645,000 as of December 31, 2019

 

 

16,000

 

 

16,000

Additional paid-in capital

 

 

191,789,000

 

 

191,060,000

Accumulated deficit

 

 

(189,812,000)

 

 

(184,633,000)

Total stockholders’ equity

 

 

1,993,000

 

 

6,443,000

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

8,847,000

 

$

14,001,000

 

The accompanying notes are an integral part of these financial statements.

6

AMPIO PHARMACEUTICALS, INC.

Condensed Statements of Operations

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2020

    

2019

    

 

 

 

 

 

 

 

 

Operating expenses

 

 

  

 

 

  

 

Research and development

 

$

4,254,000

 

$

1,564,000

 

General and administrative

 

 

1,767,000

 

 

1,112,000

 

Total operating expenses

 

 

6,021,000

 

 

2,676,000

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

  

 

 

  

 

Interest income

 

 

11,000

 

 

24,000

 

Derivative gain (loss)

 

 

831,000

 

 

(3,160,000)

 

Total other income (expense)

 

 

842,000

 

 

(3,136,000)

 

 

 

 

 

 

 

 

 

Net loss

 

$

(5,179,000)

 

$

(5,812,000)

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

  

 

 

  

 

Basic

 

$

(0.03)

 

$

(0.05)

 

Diluted

 

$

(0.04)

 

$

(0.05)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

159,054,000

 

 

111,104,000

 

Diluted

 

 

160,558,000

 

 

111,104,000

 

 

The accompanying notes are an integral part of these financial statements.

7

AMPIO PHARMACEUTICALS, INC.

Condensed Statements of Stockholders’ Equity (Deficit)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Total

 

 

Common Stock

 

Paid-in

 

Accumulated

 

Stockholders'

 

    

Shares

    

Amount

    

Capital

    

Deficit

    

Equity (Deficit)

Balance at December 31, 2018

 

110,942,000

 

$

11,000

 

$

176,228,000

 

$

(171,003,000)

 

$

5,236,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for services

 

136,000

 

 

 —

 

 

60,000

 

 

 —

 

 

60,000

Stock-based compensation, net of forfeitures

 

 —

 

 

 —

 

 

28,000

 

 

 —

 

 

28,000

Warrants exercised

 

50,000

 

 

 —

 

 

20,000

 

 

 —

 

 

20,000

Net loss

 

 —

 

 

 —

 

 

 —

 

 

(5,812,000)

 

 

(5,812,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2019

 

111,128,000

 

$

11,000

 

$

176,336,000

 

$

(176,815,000)

 

$

(468,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

158,645,000

 

 

16,000

 

 

191,060,000

 

 

(184,633,000)

 

 

6,443,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for services

 

136,000

 

 

 —

 

 

80,000

 

 

 —

 

 

80,000

Stock-based compensation, net of forfeitures

 

 —

 

 

 —

 

 

213,000

 

 

 —

 

 

213,000

Issuance of common stock in connection with the Sales Agreement

 

1,241,000

 

 

 —

 

 

682,000

 

 

 —

 

 

682,000

Offering costs related to the issuance of common stock in connection with the Sales Agreement

 

 —

 

 

 —

 

 

(246,000)

 

 

 —

 

 

(246,000)

Net loss

 

 —

 

 

 —

 

 

 —

 

 

(5,179,000)

 

 

(5,179,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

 

160,022,000

 

$

16,000

 

$

191,789,000

 

$

(189,812,000)

 

$

1,993,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

8

AMPIO PHARMACEUTICALS, INC.

Condensed Statements of Cash Flows

(unaudited)

 

 

 

 

 

 

 

 

 

    

Three Months Ended March 31, 

    

 

    

2020

    

2019

    

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net loss

 

$

(5,179,000)

 

$

(5,812,000)

 

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

Stock-based compensation, net of forfeitures

 

 

213,000

 

 

28,000

 

Depreciation and amortization

 

 

295,000

 

 

365,000

 

Issuance of common stock for services

 

 

80,000

 

 

60,000

 

Derivative (gain) loss

 

 

(831,000)

 

 

3,160,000

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

Decrease (increase) in prepaid expenses and other

 

 

698,000

 

 

(180,000)

 

Increase (decrease) in accounts payable and accrued expenses

 

 

189,000

 

 

(5,000)

 

Decrease in lease liability

 

 

(18,000)

 

 

(56,000)

 

Net cash used in operating activities

 

 

(4,553,000)

 

 

(2,440,000)

 

 

 

 

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

 

 

 

Purchase of fixed assets

 

 

 —

 

 

(5,000)

 

Net cash used in investing activities

 

 

 —

 

 

(5,000)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from sale of common stock in connection with the Sales Agreement

 

 

682,000

 

 

 —

 

Costs related to sale of common stock in connection with the Sales Agreement

 

 

(246,000)

 

 

 —

 

Proceeds from warrant exercises

 

 

 —

 

 

20,000

 

Net cash provided by financing activities

 

 

436,000

 

 

20,000

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(4,117,000)

 

 

(2,425,000)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

6,532,000

 

 

7,585,000

 

Cash and cash equivalents at end of period

 

$

2,415,000

 

$

5,160,000

 

 

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

 

 

Initial lease liability arising from the adoption of ASC 842

 

$

 —

 

$

1,704,000

 

Initial recognition of right-of-use asset arising from the adoption of ASC 842

 

 

 —

 

 

1,168,000

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

9

AMPIO PHARMACEUTICALS, INC.

Notes to Condensed Financial Statements

(unaudited)

Note 1 - Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (“SEC”) on Quarterly Reports on Form 10‑Q and Article 8 of Regulation S-X. Accordingly, such financial statements do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the financial position and of the results of operations and cash flows of Ampio Pharmaceuticals, Inc. (“Ampio” or the “Company”) for the periods presented.

These financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10‑K filed with the SEC on February 21, 2020 (the “2019 Annual Report”). The results of operations for the interim period shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2019 was derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

Impact of Global Pandemic

 

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus, COVID-19, a global pandemic. The ultimate extent to which COVID-19, and measures taken in response to it, will impact the Company’s business is highly uncertain and subject to change. The full extent of potential impacts on the Company’s business and product development, including clinical trials, financing activities and the global economy are still unknown and cannot be predicted due to the uncertain nature of the COVID-19 pandemic and its effects. However, these effects could have a material adverse impact on the Company’s business, operations, financial condition and results of operations. 

 

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company has no off-balance-sheet concentrations of credit risk, such as foreign exchange contracts, option contracts or foreign currency hedging arrangements. The Company maintains cash and cash equivalent balances in the form of bank demand deposits, United States federal government backed treasury securities and fully liquid money market fund accounts with financial institutions that management believes are creditworthy. The Company periodically monitors its cash positions with, and the credit quality of, the financial institutions with which it invests. During the three months ended March 31, 2020, and as consistent with prior reporting periods, the Company maintained balances in excess of federally insured limits.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses, and related disclosures in the financial statements and accompanying notes. The Company bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

Significant items subject to such estimates and assumptions primarily include the Company’s accrual for its current Phase III clinical trial (the “AP-013 study”) of Ampion for treatment of severe OAK,  projected future liquidity and resulting going concern position, warrant derivative liability and related periodic gains and losses, stock-based compensation, the projected useful lives and potential impairment of fixed assets, and the valuation allowance related to deferred tax assets. The Company develops these estimates using its judgment based upon the facts and circumstances known at the time.

10

Adoption of Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018‑13, “Fair Value Measurement - Disclosure Framework (Topic 820)”. The updated guidance modified the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years beginning after December 15, 2019, including interim reporting periods within those fiscal years. The Company adopted ASU 2018-13 during the first quarter of 2020 and the adoption of this guidance did not have a material impact on the Company’s financial statements.

 

Recent Accounting Pronouncements

The Company reviewed the recent accounting pronouncements and determined that none of the recent accounting pronouncements were applicable.

This Quarterly Report on Form 10-Q does not discuss recent pronouncements that are not anticipated to have a current and/or future impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

 

Note 2 - Going Concern

As of and for the three months ended March 31, 2020, the Company had cash and cash equivalents of $2.4 million and a net loss of $5.2 million. The net loss is primarily attributable to operating expenses of $6.0 million, partially offset with the non-cash derivative gain of $0.8 million that was recognized during the three months ended March 31, 2020. The Company used net cash in operations of $4.5 million for the three months ended March 31, 2020. As of March 31, 2020, the Company had an accumulated deficit of $189.8 million and stockholders’ equity of $2.0 million. In addition, as a clinical stage biopharmaceutical company, the Company has not generated any revenues or profits to date. These existing and on-going factors continue to raise substantial doubt about the Company’s ability to continue as a going concern.

During the three months ended March 31, 2020, the Company entered into a Sales Agreement (“Sales Agreement”) with two agents to implement an “at-the-market” (“ATM”) equity offering program under which the Company, at its sole discretion, may issue and sell from time to time shares of its common stock. During the three months ended March 31, 2020, the Company sold shares pursuant to the ATM equity offering program, which sales yielded gross proceeds

of $0.7 million (see Note 9).

 

The Company has prepared an updated projection covering the period from April 1, 2020 through March 31, 2021 based on the requirements of ASC 205-40, “Going Concern”, which reflects cash requirements for fixed, on-going expenses such as payroll, legal and accounting, patents and overhead at an average cash burn rate of approximately $0.8 million per month. The Company is assessing the impact of the COVID-19 pandemic on the AP‑013 study, and, as such, is not currently in a position to project the required liquidity needs for completion of the study. With the receipt of the loan proceeds from the PPP in April 2020 (see Note 13), combined with the planned disciplined use of the ATM equity offering program, it is possible that the Company may have sufficient liquidity to fund operations into first quarter of 2021.  This projection is based on many assumptions that may prove to be incorrect, including, but not limited to, the overall effectiveness of sourcing requisite capital through the ATM equity offering program in a manner that is not materially detrimental to the Company. As such, it is possible that the Company could exhaust its available cash and cash equivalents earlier than presently anticipated. In addition, the global COVID-19 pandemic continues to rapidly evolve and its effect on the Company’s operations and ability to raise capital through the ATM equity offering program, or otherwise, is currently highly uncertain and subject to change. The Company expects to seek additional capital investments in both the near and long-term to enable it to support its business operations, including specifically (i) clinical development, (ii) BLA preparation and submission, (iii) existing base business operations and (iv) commercial development activities for Ampion. The Company will continue to closely monitor and evaluate the overall capital markets to determine the appropriate timing for such capital raise, which will primarily depend on existing market conditions relative to the Company’s need for funds at such time. However, the Company cannot give any assurance that it will be successful in satisfying its future cash needs in a manner that will be sufficient to fund its operations.

 

11

The accompanying unaudited interim financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of recorded assets or the classification of liabilities, which adjustments may be necessary should the Company be unable to continue as a going concern.

Note 3 – Prepaid Expenses and Other

Prepaid expenses and other balances as of March 31, 2020 and December 31, 2019 are as follows:

 

 

 

 

 

 

 

 

    

March 31, 2020

 

December 31, 2019

 

    

 

 

 

 

Clinical trial deposit

 

$

348,000

 

$

946,000

Insurance premiums

 

 

229,000

 

 

502,000

BLA consulting services deposit

 

 

182,000

 

 

182,000

Other

 

 

146,000

 

 

29,000

Annual service agreements

 

 

81,000

 

 

25,000

Lease deposit

 

 

34,000

 

 

34,000

Total prepaid expenses and other

 

$

1,020,000

 

$

1,718,000

 

 

Note 4  – Fixed Assets

Fixed assets are recorded at cost and, once placed in service, are depreciated on the straight-line method over their estimated useful lives. Leasehold improvements are accreted over the shorter of the estimated economic life or related lease term. Fixed assets consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

As of December 31, 

 

 

 

 

 

 

 

As of March 31, 

    

 

    

Useful Lives in Years

    

2019

    

Additions

    

Disposals

    

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing facility/clean room

 

3 - 8

 

$

3,081,000

 

$

 —

 

$

 —

 

$

3,081,000

 

Leasehold improvements

 

10

 

 

6,075,000

 

 

 —

 

 

 —

 

 

6,075,000

 

Office furniture and equipment

 

5 - 10

 

 

520,000

 

 

 —

 

 

 —

 

 

520,000

 

Lab equipment

 

5 - 8

 

 

1,137,000

 

 

 —

 

 

 —

 

 

1,137,000

 

Less accumulated depreciation and amortization

 

 

 

 

(6,065,000)

 

 

(295,000)

 

 

 —

 

 

(6,360,000)

 

Fixed assets, net

 

 

 

$

4,748,000

 

$

(295,000)

 

$

 —

 

$

4,453,000

 

 

Depreciation and amortization expense for the respective periods is as follows:

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2020

    

2019

    

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

$

295,000

 

$

365,000

 

 

 

 

12

Note 5 – Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of March 31, 2020 and December 31, 2019 are as follows:

 

 

 

 

 

 

 

 

    

March 31, 2020

 

December 31, 2019

 

    

 

 

 

 

Accounts payable

 

$

1,226,000

 

$

151,000

 

 

 

 

 

 

 

Clinical trial

 

 

2,563,000

 

 

3,288,000

Professional fees

 

 

377,000

 

 

317,000

Property taxes

 

 

25,000

 

 

96,000

Other

 

 

18,000

 

 

30,000

BLA consulting services

 

 

5,000

 

 

28,000

Insurance premiums

 

 

 —

 

 

21,000

Accrued compensation

 

 

 —

 

 

72,000

Director fees

 

 

 —

 

 

22,000

Accounts payable and accrued expenses

 

$

4,214,000

 

$

4,025,000

 

 

Note 6 - Commitments and Contingencies

Commitments and contingencies are described below and summarized by the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Total

    

2020

    

2021

    

2022

    

2023

    

2024

    

Thereafter

Key clinical research trial obligations

 

$

2,193,000

 

$

2,193,000

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

BLA consulting services

 

 

1,143,000

 

 

 —

 

 

1,143,000

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Statistical analysis and programming consulting services

 

 

350,000

 

 

350,000

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Employment agreements

 

 

1,911,000

 

 

649,000

 

 

783,000

 

 

466,000

 

 

13,000

 

 

 —

 

 

 —

 

 

$

5,597,000

 

$

3,192,000

 

$

1,926,000

 

$

466,000

 

$

13,000

 

$

 —

 

$

 —

 

Key Clinical Research Trial Obligations

In March 2019, the Company entered into a contract with a clinical research organization (“CRO”) in connection with the AP-013 study totaling $6.2 million and covering an initial clinical trial size of 724 patients, which was increased by $4.1 million in January 2020 as a result of an increase in number of patients to 1,034 resulting in the CRO contract commitment totaling $10.3 million. From the inception of this contract through March 31, 2020,  the Company incurred and accrued cumulative costs totaling $8.3 million against the contract. This contract had an outstanding obligation for future costs and services totaling $1.9 million as of March 31, 2020. In March 2020, recognizing the challenges due to the global COVID-19 pandemic, the Company announced the close of patient enrollment in the AP-013 study. The Company is exploring options to enable it to complete the AP-013 study; however, it is possible that the COVID-19 pandemic may prevent completion of the AP-013 study at this time or at all. Due to the uncertainty resulting from COVID-19, the future contractual commitment amount related to the AP-013 study may change. The following table provides further detail of the Company’s current contractual obligations for the conduct of the AP-013 study, which does 

13

not include any changes related to the potential impact of COVID-19, as such impacts are unknown and cannot be reasonably estimated at the date of this filing:

 

 

 

 

 

 

    

March 31, 2020

 

    

 

Original contract

 

$

6,180,000

Amendment to contract

 

 

4,075,000

Total Contract

 

$

10,255,000

 

 

 

 

Initial deposit (included in original contract amount)

 

$

861,000

Amendment to deposit

 

 

699,000

Expenses incurred applied to deposit

 

 

(1,212,000)

Remaining Deposit

 

$

348,000

 

 

 

 

Expenses incurred/accrued (includes expenses applied to deposit)

 

$

8,314,000

 

 

 

 

Total future commitment

 

$

1,941,000

 

In June 2019, the Company entered into a contract with a patient recruitment services company in connection with the AP-013 study totaling $264,000. In September 2019, the Company finalized contract negotiations to increase the contract to $377,000 as a result of an increased number of patients, from 724 to 1,034, required for the study. In January 2020, the Company finalized contract negotiations to increase the contract to $698,000 as a result of increased advertising for the AP-013 study. The Company estimates that it incurred an additional $20,000 of expense relating to printing supplies for this contract. Therefore, the Company expects the contract to total $718,000. The Company had incurred cumulative costs under the current contract totaling $718,000 and had no outstanding obligation as of March 31, 2020.

 

In November 2019, the Company entered into a contract with a  clinical staff outsourcing firm to assist with the AP-013 study, with an adjusted estimated cost totaling approximately $463,000 as of March 31, 2020. The Company had incurred and accrued cumulative costs under the current contract totaling $211,000 and had outstanding future obligations totaling $252,000 as of March 31, 2020.

BLA Consulting Services

In March 2018, the Company entered into a BLA consulting services agreement for $1.2 million. This contract required a deposit of $364,000, of which $182,000 was funded and is recorded within the “prepaid expenses and other” line item on the balance sheet. The Company incurred cumulative costs totaling $69,000 against this contract and had outstanding obligations totaling $1.1 million as of March 31, 2020. This contract does not have an expiration date. The Company incurs costs under the contract as sections of the BLA are drafted for the submission of the complete BLA to the U.S. Food and Drug Administration (“FDA”). Due to the unknown impact of COVID-19 on the AP-013 study specifically, and the Company’s operations generally, at the date of this filing, the Company expects the incurrence of the remaining costs associated with the preparation of the BLA filing to be postponed until fiscal 2021.

Statistical Analysis and Programming Consulting Services

In May 2019, Ampio entered into a statistical analysis and programming consulting services agreement for $578,000. The Company had incurred cumulative costs totaling $228,000 against the contract as of March 31, 2020 and, as such, had an outstanding obligation of $350,000 at March 31, 2020.

Employment Agreements

On December 14, 2019, the Company entered into a new three-year employment agreement with Mr. Macaluso,  Chief Executive Officer, which became effective January 10, 2020, immediately following the expiration of his prior

14

employment agreement. The new employment agreement provides for an annual salary of $300,000 and term ending January 10, 2023, subject to certain automatic renewal provisions.

On September 16, 2019, the Company entered into a new two-year employment agreement with Ms. Cherevka, Chief Operating Officer, which by its terms cancelled the previous employment agreement on such date. The new employment agreement provides for an annual salary of $280,000 and a term ending September 16, 2021, subject to certain automatic renewal provisions.

The Company entered into an employment agreement with Mr. Daniel Stokely, Chief Financial Officer, on July 9, 2019, which provided for an annual salary of $285,000 and a term beginning July 31, 2019 and lasting for three years, subject to certain automatic renewal provisions. The employment agreement, as amended in December 2019, allowed for reimbursement of reasonable commuting and relocation expenses for up to eight months. The commuting and relocation expenses were incurred in full as of March 31, 2020.

Amounts noted above do not assume the continuation of employment beyond the contractual terms of each employee’s existing employment agreements.

Facility Lease

In December 2013, the Company entered into a 125-month non-cancellable operating lease for office space and a manufacturing facility. The effective date of the lease was May 1, 2014. The initial base rent of the lease was $23,000 per month. The total base rent over the term of the lease is approximately $3.3 million, which includes rent abatements and leasehold incentives. The Company adopted the FASB issued ASC 842, “Leases (Topic 842)” effective January 1, 2019. With the adoption of ASC 842, the Company recorded an operating ROU asset and an operating lease liability on its balance sheet. The ROU asset represents the Company’s right to use the underlying asset for the lease term and the lease obligation represents the Company’s commitment to make the lease payments arising from the lease. ROU lease assets and obligations are recognized at the commencement date based on the present value of remaining lease payments over the lease term. As the Company’s lease does not provide an implicit rate, the Company used an estimated incremental borrowing rate 5.75% based on the information available at the commencement date in determining the present value of the lease payments. Lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. The lease liability is classified as current or long-term on the balance sheet.

The following table provides a reconciliation of the Company’s remaining undiscounted payments for its facility lease and the carrying amount of the lease liability presented in the balance sheet as of March 31, 2020: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Facility Lease Payments

    

2020

    

2021

    

2022

    

2023

    

2024

    

Thereafter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Remaining Facility Lease Payments

 

$

1,597,000

 

$

253,000

 

$

345,000

 

$

355,000

 

$

364,000

 

$

280,000

 

$

 —

Less: Discount Adjustment

 

 

(190,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total lease liability

 

$

1,407,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease liability-current portion

 

$

265,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term lease liability

 

$

1,142,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

The following table provides a reconciliation of the Company’s remaining ROU asset for its facility lease presented in the balance sheet as of March 31, 2020:

 

 

 

 

 

 

    

Right-of-Use Asset

 

 

 

Balance as of December 31, 2019

 

$

1,003,000

Amortization

 

 

(44,000)

Balance as of March 31, 2020

 

$

959,000

 

The Company recorded lease expense in the respective periods is as follows:

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2020

    

2019

    

 

 

 

 

 

 

 

 

Lease expense

 

$

67,000

 

$

66,000

 

 

 

Note 7 – Warrants

The Company has issued equity-classified warrants and liability warrants in conjunction with previous equity raises. The Company had a total of 2.7 million equity-classified warrants and 4.4 million liability warrants outstanding as of March 31, 2020.

 

The following table summarizes the Company’s warrant activity:

 

 

 

 

 

 

 

 

 

    

 

    

Weighted

    

Weighted Average

 

 

Number of

 

Average

 

Remaining