Ampio Pharmaceuticals, Inc. (NYSE:AMPE) Q4 2021 Earnings Conference Call March 29, 2022 4:30 AM ET
Company Participants
Michael Martino – Chairman and Chief Executive Officer
Dan Stokely – CFO
Holli Cherevka – President and COO
Howard Levy – Chief Medical Officer
Nicolas Johnson – Russo Partners, LLC
Conference Call Participants
Operator
Good day everyone and welcome to Ampio’s Fourth Quarter 2021 Earnings Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Mr. Dan Stokely, Chief Financial Officer. Please go ahead, sir.
Dan Stokely
Hello, everyone, and welcome to Ampio’s fourth quarter 2021 financial results and business update call. My name is Dan Stokely and I’m joined today by Chairman and CEO, Mike Martino; and President and Chief Operating Officer, Holli Cherevka.
Our fourth quarter 2021 10-K and earnings information was released today March 29, 2022 at 4:10 PM Eastern Time and can be found on the Investor Section on our website ampiopharma.com under Financial Filings.
Before we begin, I’d like to remind our listeners that this 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 include that are not limited to the matters listed under Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020, which is also 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 also available at www.sec.gov.
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 I would like to turn the call over to Chairman and CEO, Mike Martino.
Michael Martino
Thank you, Dan. Good afternoon, everyone. Before I proceed, I would like to take this opportunity to welcome Elizabeth Jobes to our Board of Directors. Liz has nearly three decades of legal and compliance experience. Her addition and skill set are essential to our future as we correspond with the FDA, organize our biologics license application and pursue strategic partnerships. We are pleased to have Liz joined the Board.
Just a few weeks ago, on March 2, we hosted a webinar to disclose and discuss AP-013 data, update you on the status of our discussions with FDA and update you on the status of the COVID trials. Frankly, and as expected, not much has changed in the past few weeks. So, this call will be a quick refresher, primarily focused on updating our financial results, and answering questions.
To begin, I’d like to summarize what we believe are the major takeaways from our webinar call regarding the status of AP-013 and discussions with FDA as follows. We enrolled 1,043 patients in AP-013 versus a targeted enrollment of 1,034 patients. COVID-19 had a material impact on the trial, specifically impacting sites and patient examination visits and resulting in a material amount of missing efficacy data.
The FDA recommended we conduct a sensitivity analysis to detect the impact of COVID-19 on the study, which we outlined and documented in a study plan prior to unblinding the study data. This assessment determined that there were, in fact, two patient populations, a pre-COVID population, with approximately 7% missing data, and a — during COVID population with approximately 70% missing data.
Consistent with that plan and analysis, we have proposed a modified intent to treat or mITT population with an N of 619 patients to evaluate efficacy in the AP-013 trial. Applying the statistical analysis plan and the trial protocol, we have determined the following. First, the intent to treat was not statistically significant for either pain or function, which is frankly not surprising, given the large amount of missing data and mandated imputation.
Second, modified intend to treat over 12 weeks was statistically significant for pain and trended toward functional improvement without statistical significance for function. Furthermore, modified intent to treat at 12 weeks was statistically significant for both pain and function.
Finally, the per protocol analysis, and an N of 580 patients demonstrated statistical superiority for both pain and function. Now, Holli cover these points in detail in the prior webinar. And I point you to the recording with slides that is archived on our website.
As reported, we have submitted these analysis in a Type C meeting request to the FDA. The central question in that request, is whether FDA will accept the AP-013 trial as a confirmatory trial to AP-03a in support of a BLA. FDA has acknowledged that meeting request and committed to answering our questions in writing. I want to reiterate that has previously communicated we are on track to have clarity on that question by the end of the first half of this year. Additionally, I want to update you on our three active COVID trials, AP-017, AP-019, and AP-018.
Before doing that, however, I want to put this update in the context by highlighting data in our first two COVID studies, AP-014 and AP-016. As a reminder, prior to AP-017, 18 and 19, the company conducted two studies in respiratory distress in a very different COVID landscape. AP-014 studied 40 patients with inhaled and beyond versus standard of care and demonstrated a nearly 80% reduction in mortality in the Ampion arm versus standard of care.
AP-016 study 10 patients with IV Ampion versus standard of care and demonstrated no difference in mortality rates between the arms. So where are we with current studies? Well, firstly, AP-017 was designed as a follow on to AP-016 to evaluate IV Ampion treatment and up to 200 severe COVID-19 patients with a planned interim analysis at 30 patients for sample size re-estimation.
The interim enrollment and analysis is complete. The observed safety profile of IV Ampion treatment has been excellent to date and supports further study of IV administration. However, enrollment to date has been slow. And this is due to both the changing nature of COVID as well as increased competition for clinical trial patients from both approved drugs and other drugs in clinical trials.
In addition, we have simply not observed sufficient differentiation in the treatment signal between the two study arms in the 30 patients enrolled in the interim analysis. Finally, given these factors, it would take a significant increase in time and money to expand countries and clinical sites to enroll more than the 200 patients originally planned to have the power to demonstrate clinical benefit. Therefore, we have stopped further enrollment in AP-017, while analyzed the data completely to determine next steps for the use of IV Ampion.
Next, AP-019 was designed as a follow up to AP-014 to evaluate inhaled Ampion treatment, and up to 200 severe COVID-19 patients, again with an interim analysis for sample size re-estimation. Planned interim enrollment was completed with 129 patients in the first quarter of 2022. We’re on track to complete the data analysis by the end of the second quarter of this year, at which time will determine and communicate next steps for this study.
However, it’s important to note that we’ve observed a significantly lower death rate in 129 patients enrolled in AP-019 than on the 40 patients enrolled in AP-014. We believe this reflects the significant evolution in the COVID-19 standard of care from that which existed with the AP-014 and in fact AP-016 trials were initiated. The impact of this evolution of care on the AP-019 analysis remains to be seen.
And then finally, AP-018 was designed to study inhaled and beyond use at home in long COVID patients. We completed the planned enrollment of 32 patients in December 2021 and are currently performing planned day 60 post treatment safety and efficacy evaluations, which we expect to be completed during this first quarter. Once we have final study results, we will determine and communicate next steps for this program.
With that, I’d like to turn the call back to Dan Stokely, our CFO to update our financials.
Dan Stokely
Thank you, Mike. The following is an overview of our results from operations for the fourth quarter and 12-month periods ending December 2021 and 2020. We realized a net loss of $6.2 million for the fourth quarter 2021 compared to a net loss of $4.6 million for the fourth quarter of 2020 and $17.1 million for the year of 2021 compared to a loss of $15.9 million for the year ending December 31, 2020.
A breakdown of the key variances are as follows. Research and Development expenses were $4.7 million for the 2021 fourth quarter, compared to $2.1 million for the fourth quarter of 2020 and $11.9 million for the 2021 year compared to $9.2 million for the year ending December 31, 2020.
The primary drivers of the year-over-year increase are incremental costs associated with the COVID-19 Phase 1 and 2 studies, which were initiated late in 2020 and continued during the 2021 period. These costs were partially offset by a reduction in costs associated with the AP-013 study which was paused in the 2020 period.
General and administrative expenses were $4.5 million for the 2021 fourth quarter, compared to $1.8 million for the fourth quarter of 2020 and $8.7 million for the 2021 year, compared to $6.7 million for the year ended December 31, 2020. The increase was primarily attributable to increase in non-cash share-based compensation, along with professional fees for legal and other advisory services.
Cash and cash equivalents on December 31, 2021, totaled $33.9 million, compared to $17.3 million as of December 31, 2020. This increase was driven primarily from net proceeds received from the closing of a registered direct offering in December of 2021, totaling $20.7 million and net proceeds of $10 million from the sale of common stock with the at the market equity offering program throughout the year. This increase was partially offset by cash used in operating activities totaling $14.1 million. We expect that our cash position will fund current operations into the second half of 2023.
I would now like to turn the call over to Nick Johnson with Russo Partners, who will coordinate the Q&A session.
Question-and-Answer Session
Q – Nicolas Johnson
Thank you, Dan. As a reminder, in order to submit questions, participants must have internet connectivity as questions will only be addressed via the webcast. The conference call line will be in listen-only mode. First question, what is a realistic timing if all goes smoothly to get FDA approval for the use and sale of Ampion?
Michael Martino
Thank you, Nick. I think realistic timing based on the guidance we’ve provided would be clarity by the end of the first half. I think we’re on track to achieve that. As previously communicated, and I know some of you have recoiled at this, but the reality is that even for large pharmaceutical companies, the typical time required to submit a BLA is about 12 months.
Now we believe we have a jump on that process. As communicated, we’ve begun what’s called a gap analysis to determine what we have in place and what remains to be completed and assembled for that BLA, and the guidance that we’ve given is, end of Q2 of next year. We’ve also indicated that we would expect resources from a partner to potentially help us accelerate that schedule.
Finally, on approval, again, I think for those specifically not accustomed to drug development, approval time can typically take up to 12 months and with COVID, that has taken a longer period of time for many, many drugs. And that’s simply beyond drug sponsors’ control. So, I think a safe assumption is end of second quarter of next year for submission of the BLA and for an approval cycle to take up to a year.
Nicolas Johnson
Next question, do you anticipate that the same or a different partner will handle the implementation of Ampion for different medical conditions? Example one for me, one for long-term COVID question?
Michael Martino
Nick, I appreciate the question. And I think at this point, I have to repeat what we said on the last call, which is, at this point in time, all potential sizes, shapes and flavors of partnerships are on the table. And I think once we have heads of agreement in hand and can actually announce that, we’ll be in a better position to provide clarity.
Nicolas Johnson
Next question, with COVID-19 cases dwindling down in the U.S at the moment, what are your prospective plans for Ampion for COVID-19 and long [ph] COVID following the completion of current COVID trials?
Michael Martino
Well, again, I think that is a question we’ll be better prepared to answer once we have the totality of data from the three current trials, in addition to the two initial pilot studies that were conducted. One thing is very, very clear, and that is the COVID landscape has evolved rapidly. We’re in the process of completing some externally conducted market research, for example, that suggests that since we initiated 17, 18 and 19, there are 8 new drugs available for the treatment of COVID that weren’t available when we initiated those trials. One is a neutralizing monoclonal antibody. Three are anti virals, four are anti inflammatories. And that’s an addition, of course to the significantly ramped up use of vaccines.
So, I think what I can say at this time with clarity, is that we are very pleased with the safety profile for IV Ampion that emerged in our AP-017 trial. And that gives us encouragement, in fact, that IV administration of Ampion is a viable potential administration route. I think we need to wait until we’ve completed the analysis of the data in the initial two trials. And of course, as part of that we will continue to update our evaluation of market opportunities. So, I think unfortunately, we have to wait until about the middle of this year before we can provide further clarity on that.
Nicolas Johnson
Next question. Are there any plans to run additional trials on other joints and other forms of arthritis?
Michael Martino
At this point, tangible plans, no. We do not have any specific clinical trial protocols pending or approved to run additional trials. However, I can tell you that both internally and in discussions with potential partners, we are very excited about the possibility to expand applications of Ampion from treatment of pain of severe osteoarthritis in the knee to treatment of osteoarthritis and other articular joints. And I think the plan to actually accomplish that expansion will benefit significantly from partner input. And so once again, I think that’s something we will be able to provide clarity on later in the year.
Nicolas Johnson
Next question. Do you see any potential earning differences between Q4 ’21 and Q1 ’22?
Dan Stokely
Yes. Hi, Nick. It’s a good question. If you look at our earnings release, Q4 of 2021 had a fairly significant skew compared to the prior year, and even if you were to look at the prior quarter in the current year. And one of the large — and we spelled out in the earnings release, one of the large anomalies was, we issued some restricted stock units in the fourth quarter. And as we put in our press release, those are non-cash expenses, and there was a piece of that, that was vested upon issuance and those vest about 20% per year. So, there is an acceleration of costs on cash in the fourth quarter. There was also some professional fees that I would consider to be more weighted in the fourth quarter.
On the R&D side, in the fourth quarter, there was a fairly substantial enrollment uptick on the COVID program, specifically on 019 and the completion of 018. And as we have said to the public markets, 018 has finished enrollment. And so, I would expect the run rate in Q1 from a cash burn standpoint to probably be slightly lower. And then taking into account the non-cash it would be slightly lower on that perspective as well because of the acceleration of the non-cash expense.
Nicolas Johnson
Next question. From the AP-013 study, can you please explain the difference between the two modified studies submitted to the FDA?
Michael Martino
Sure. The difference between the two modified studies submitted to the FDA, I would first say that the first study submitted, 03A, wasn’t modified. That has been submitted and accepted by the agency as one trial to support a BLA based on both the intent to treat and per protocol endpoints that were specified in the protocol. I would ask Holli to review the proposed modifications to trial 013.
Holli Cherevka
Thanks, Mike. To elaborate on what you said, the AP-013 protocol includes the submissions and proposal to the FDA, includes the two populations just discussed, the intent to treat or ITT population and the per protocol population, as well as a proposed modified intent to treat to take into account and evaluations of those patients with a target indication who are not impacted by COVID-19.
Nicolas Johnson
Next question. So, what will management focus on while we wait on clarity with the FDA?
Michael Martino
What will we focus on? Well, number one, as I indicated earlier, we aren’t waiting for the answer from FDA. We are beginning to assess our BLA, fill the gaps and assemble that document. Number two, I think we’ve been pretty clear that we are pleased with the level of interest from potential partners. And that interest takes up a lot of time in terms of both confidential discussions, follow-up and answering questions and keeping the confidential data room to give them access to our confidential data fresh.
Number three, I hope it’s been pretty clear that we are not giving up on product development. I would characterize our research and development approach as more focused. And related to that, we are undertaking to, on the one hand, update our appreciation and understanding for the OAK market, and what will be required to successfully launch product in that market. And even though we don’t plan to do that ourselves, we plan to get a partner, our conversions on those issues, our level of knowledge on those issues will be a very important part of the negotiating process.
And then finally, as indicated, we are very excited about the opportunity to expand Ampion application from OAK to other joints, perhaps beyond the treatment of other joints. And perhaps in other dosage forms and/or other formulations. So, you’ve heard me say before that we are a 20-person team. And I would say that, that team is very well engaged today on 5 or 6 key corporate goals for the coming year.
Nicolas Johnson
That concludes our Q&A session. We will now turn the call back to Mike Martino for closing remarks.
Michael Martino
Thank you, Nick. Listen, everybody, I want to summarize that I really believe we’ve made good progress and have maintained and, if anything, increased momentum as we move from Q4 of 2021 into Q1 of 2022. I’m extremely proud of the lean team here for their hard work in delivering this progress. I am very optimistic, cautiously so, about the future and specifically the next value inflection point being feedback from FDA. And I, and we, look forward to updating you on our next call as we continue to make progress. So, thank you, everyone. Operator, please conclude the call.
Operator
Thank you. This does conclude today’s call. Thank you all for joining You may now disconnect your lines.
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