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Ampio Pharma’s 12/14/17 and 3/7/18 Conference Call Transcripts

These calls were transcribed from Ampio’s (AMPE) Presentations & Media webpage here.

12/14/17 Conference Call Transcript

The trial that will enable us to treat patients is already underway.

Many of people have asked about money. If you ask any pre-revenue bio CEO he’ll say he has no interest in raising money, then as soon as he can he’ll raise it anyway. I’m going to tell you we’ll do everything we can so we do not have to raise any dilutive capital. #1 we have enough to last the next 5 or 6 months. Our largest warrant holders said they would exercise their warrants if the data was good, so we can expect that. And if they do, then another $10M will come through easily, and that will let us go through all of our negotiations and into 2019. We can’t save our way to salvation, we’re a pre-revenue company, so if we don’t raise money, we’re going to have to get some kind of business transaction completed. I’m going to talk about our involvement with pharma in the last few months, and what we expect in the future. I think we’ve had 18 pharma meetings so far, including a few this week. 55 companies worldwide have expressed interest, many of these were awaiting the outcome of this trial. I would expect that they’ll all take a meeting now. All of our options are open, acquisition, partnering, licensing, and even doing it ourselves but with a twist. Some of the interesting parties, the pharmaceutical companies, are not involved in pain. They do not have an OA sales force and they’ve never worked in the OA sector. But they still want to explore the possibilities. We’ve prepared an approach that would sell Ampion without the need for a sales force. I presented this plan to a large health care fund in New York City, as well as the various large orthopedic clinics. They all were in favor of the plan. But this is only one of the options we will consider: as mentioned, acquisition, partnering, licensing, or doing it ourselves with a twist, are all on the table.

When you meet with pharma their questions are very different than what an investor would ask. Also under a CDA, they have access to confidential material in our data room. Things like party opinions, cost of goods, FDA meeting minutes, etc. Here’s some examples of questions that may be asked.

There have been so many interactions and so many questions with pharma, and I would like to share these interactions with you. Right now it’s important that we answer your questions and we open the line to answer your questions.

The open label extension they’ll receive an extension of Ampion, every 12 weeks for a year.

I’ve asked some of the pharma companies we’re talking to if we should do injections in other body parts. Some pharma companies think this will be sold off label anyways, so further expense of trials aren’t necessary. Others think for reimbursement purposes should a trial be good to do. So it’s in our best interest to look at that, but now we’re going to consider other options, other steps.

Some pharma companies have told us to just get it approved, and we’ll take it from there.

I think that depending on the size of the pharma and their intentions, they would perhaps want to file the BLA themselves, name it, and time it based on their needs for bringing the drug to market. That has generally been the flow of our conversations with the larger pharmaceutical companies. The smaller pharmaceutical companies that aren’t small but smaller than the top 7 or 8, their interest is more about licensing or partnering or other sort of considerations.

So we have slowed down the BLA processing a little bit based on guidance from Locustwalk and their suspicion that pharma might want to do the filing themselves. We’re going to kick it up a notch or 2 here right after the first of the year, just so we’re prepared for whatever comes our way. So I think that the major companies would like to file the BLA themselves depending on the time it hits the market.

We’re at the point now it’s easy to talk about valuations and appraisals, but now we’re in the point of negotiations. And I don’t know at this point what’s really the right direction for us to take. We’re open to all suggestions. I look at what Medivation did and how they maximized the return to their shareholders. I think there’s a time element to make sure shareholders are rewarded. Some of the opportunities we’ve been presented thus far that don’t include acquisitions, but partnering, make a lot of sense from a business standpoint.

What we’re going to do now Rich, is play it out. Take our time. I expect now we’ll have upwards of 30 meetings with pharma scheduled in the next month. I trust my board immensely, I also will take in some of our biggest shareholders to help us make some of our decisions going forward. Plus we have Locustwalk and other people to assist us. So I think we’ll make a good decision and I think we’ll have some options we’ll be looking at. So the goal is not to do it ourselves, but if we did do it ourselves, it would be with a unique twist and we’ll also have a pharma partner with us.

Tomorrow we have a meeting, we had a meeting this week already. So now with this data I think things have changed.

One of the larger pharmas we spoke with has suggested that they would wait until one of their key drugs would fall out of patent, and use this to fill in. It depends how we play this. I think in the next 30-60 days we’ll have a very good idea of the direction we’re going to take, I think that as a result of this information, and the data we haven’t discussed, the parts of this trial that we’re saving for the journals and presentations are also very compelling. I think we’re going to have an option to get an attractive transaction completed, and I don’t think it’s going to take us very long to do that.

We have enough money to get us through these negotiations. I don’t think we’ll show any weaknesses through these negotiations. I think we’ll be in a good cash position to negotiate strong without taking any more dilution. I don’t know how long it’s going to take, I don’t suspect it will take very long, but we’re prepared to do what we have to do.

I want to keep our investors informed of our progress. I think right now we’re in the enviable position of having something that a lot of people are interested in. When you’re in a business like this, there’s so many boxes that need to be checked to make it valuable.  I think we’ve checked pretty much every box. I also think we have to be smart now and clearly evaluate our options and be careful what we say going forward, but still keep our shareholders informed. That’s a fine line, but I’m going to try and manage it pretty well.

If it was just us, we met with the FDA so many times in the past 12 months, 8-10 conversations, we want to have a pre-BLA meeting, but also respect the timelines of our potential partners. We’re going to work on the BLA. But I don’t know that timing because that will be determined by who will be our partner in the future.  So ask me that question in 60 days and I’ll be able to give you a better answer.

Glad we had great results. But now the work begins again, we start our discussions, our negotiations, the completion of our bio-assay, our work towards the BLA, and figuring out what’s the best for our shareholders, both long and short term. We’ll keep you appraised of our progress, I’ll try to have calls regularly to update you.

3/7/18 Conference Call Transcript

CFO Thomas Chilcott

Part 1 of 10-K under different trial results they’ve had.

We have a $25M credit line that is available to the company currently. Closed year with $8.2M in cash. We will file our BLA sometime in 2018. Cash burn has increased from $700k per month in 2017 to $830K in 2018, as the company ramps up expenses to file the BLA, and to prepare our manufacturing facilities for commercialization. In 2017, have a new COO and new CFO of the company.

In BS, ended year with $8.2M in cash, had derivative warrant liabilities.

In statement of operations SG&A declined in 2017. $36 non-cash derivative loss due to the warrants.

As far as options are concerned, we did receive additional funds of $434K from options being exercised since 9/30/17. As far as warrants, we have gone from 17.5M warrants down to 7.8M warrants as of today. All of the 40c warrants have been exercised. In June 2017, Mike and I devised a plan to slowly strengthen our balance sheet from strategic decisions. Received $2.8M in first 2 months of 2018, and have access to a $25M credit line.

CEO Michael Macaluso

Strengthening the balance sheet is easy, raising the money is easy, managing the balance sheet is much more difficult. Trying to figure out how to manage dilution, keep dilution to a minimum, especially when we’re in negotiations. And we have the potential here in the near future to move in a totally different direction. Obviously dilution is important to me,    I want to keep it to a very minimum. So I believe right now, we have enough capital to get us through at least the rounds of discussion we’re going through and I’ll talk about that in minute. So I like where we’re are now in regards to financing. But we have enough to certainly get through what we need to do. I want to highlight a couple important events. The first thing I want to talk about is our extension study. Obviously an extension by its very name, is an extension of the 003c study, where we announced the data in December. Patients in the study are receiving their 3rd injections now. There will be a total of 5 injections over a 12 month period. It’s not 12 months from Jan 1 or Dec 15, it’s 12 months from when the patients in that trial received their first Ampion injection. So those that got their first in June 2017, the trial will be done for that patient by June 2018. We will try to complete that trial about the same time we’re ready to file our BLA. So it’s really important that we stay on our path there and we get these things done, and get our BLA prepared along the same lines.

This trial is important for a number of other reasons. First, the FDA requires it to show safety of our product over an extended period of time. Obviously it’s needed for our label because this is 5 injections, our label is needed for 5 injections a year. And remember we’re addressing an unmet medical need.

But the extension also has another purpose. I want to touch on for just a second disease modification. Not symptom reduction, but disease modification. The extension study will have before and after radiology. We believe that a single (formal?) injection of Ampion is enough to give patients great comfort and improve mobility, but not enough to provide healing potential. However, 5 injections over the course of 12 months could show signs of regeneration and improvement in the knee joint.

This is another function of this trial, comparing before and after radiology. Also, we are conducting an analysis of one of our prior multiple injection studies, where we show a 65% reduction in pain, against the saline control, but only on very severe patients. We will look back at those patients now, and see how many of them actually had a knee replacement, or dropped off the list. Most of the patients in that trial because they were very severe, are either waiting for a knee replacement, or on the cusp of receiving one.

Disease modification is difficult to prove, and will require focus studies to provide compelling evidence, and the evidence is also difficult to gather, because you need really sophisticated measuring instruments. They will be conducted post marketing, we have no intention of starting those trials now, and that is something we prefer to do with a partner. However we believe we have enough evidence, anecdotally, in vitro and in vivo to justify the expense of those trials, after we’re approved. But I want to emphasize something because disease modification is kind of a hot topic and a buzz phrase, there’s nothing wrong with having a label that reduces pain, improves function, reduces stiffness, and has patients reporting an overall improved quality of life. I think we can live with that label and that designation for many years to come.

So that’s an update on our extension study, it will be done around the 3rd quarter of this year, and those things will be recorded. I want to stress though, it’s not an efficacy study, it’s just for safety. And so far in the trial, it has been going on for many months, there has been no reported adverse events. I’d also like to mention that on the December call, I said that it would take a few months or more to completely analyze the data from our 2nd pivotal trial. The 003C study. The report that is being compiled is called a CSR, a clinical study report, and it’s about 300 pages in total. It’s managed by outside consultants it’s not something we do internally. It’s required by the FDA, it’s part of our BLA, it is carefully reviewed by the pharmaceutical companies we’re in discussions with. It contains all the data of our final pivotal trial. It is also the basis for publishing in peer reviewed journals, so that document is very important for all those reasons. That document is probably 98% complete, we expect to have it by the end of next week, and those things that I mentioned before will all happen as a consequence. Because we did not want to be valued based on our current market cap, and we felt that our value proposition is much higher than where we’re currently valued, we engaged a very reputable independent market research firm to value Ampion. It’s not an appraisal, although it does have an appraisal, but it’s more complete than that. How does Ampion compare to approved OAK treatments already on the market? How does Ampion compare to drugs currently on trial with the FDA? What do key opinion leaders and key doctors think about Ampion? How fast will Ampion penetrate the market once it’s approved? How will it be reimbursed? Medicare, Medicaid, insurance, managed care? How big is the severe OAK market? Is it a niche, or is it a major market? I’ll give you a hint, it’s not a niche, it is a major market. How quickly will Ampion gain traction? And how will price affect how much traction is gained? And this list of questions that are answered go on and on. While I don’t necessarily agree with everything in the report, and eventually the report will be made public but certainly not for awhile, I was blown away by the amount and the quality of the research they conducted and their willingness to support and defend their statements and conclusions, not just to me, but to anyone else including the pharma people we are currently in discussions with. For example, when pharma asked Mike how long do you think it will take to reach maximum penetration? Or, what is the selling price of Ampion? I have an opinion, but I’d much rather give an answer based on scientific research and independent authority. And I think that benefits us a great deal in the discussions we’re currently having. While our market cap is hovering around $200M, I’m glad we have a reputable, independent research report showing the real value of Ampion, to be many multiples of our current market cap.

Our BLA. We’re working to file our BLA, it’s a priority. And we’re looking to get it filed as quickly as possible. The amount of work required is extensive, it’s massive, and so we’ve hired a large outside firm to help us manage the process. They’ll write certain modules, they’ll assist us in writing other modules, and review all those modules that we’ve already completed. Our goal is to file the BLA as soon as possible. And whether Ampio files it themselves, or we file it with someone else, or someone else files it without us, our goal is to get it filed as quickly as possible. Market research shows that we’re one of a few companies, one of a very few small companies, that has a manufacturing facility that’s capable of servicing international selling efforts. It sounds good, and I like to say it, and it feels good to hear. But I can tell you that’s a ton of work towards the filing of our BLA. Everything that comes into our facility, everything that goes into our clean room, our clean room is our manufacturing facility, has to be validated. All raw materials, human serum albumin, the space suits our operators wear, the hats, the gloves, the vials the caps, the cleaners, the hoses, everything that comes into our facility. We have to do inspections, the manufacturers, the people who make our hoses make our filters, we have to visit the facility, audit their procedures, and make sure they are 100% compliant with what we’re doing here at Ampio. All those things I just told you, we have 17 full time employees here. And while we’re doing all that, we’re in negotiations with pharmaceutical companies from all over the world, Pacific Rim, Europe, US, etc.

So those negotiations are ongoing. Some are acquisitions, some are licensing, some are partnerships, some are US specific only, some cover all the major markets. How long will that process take to complete? I don’t know I really don’t know how long it will take. Which option would I prefer? I really don’t have a preference because all of them have advantages and disadvantages. One thing I want to ensure we do, is right now we’re talking about a multi-billion dollar a year business, with just OA of the knee. What about OA of the hand? Of the hip? The neck? The back? Tennis elbow? Carpel tunnel? There’s so many indications for just Ampion that we need to explore. Some can be used without the benefit of a clinical trial, I’m told. Others are going to require clinical trials. One thing we have to make sure, is that we take advantage of this opportunity, and the flexibility of this drug. We are dealing with a drug that addresses right now a severe patient population, and the drug is safe. It’s effective and safe, it is an unmet medical need, and therefore, we believe, it’s important that we find an arrangement a relationship   with someone who is going to carry those other indications forward. Obviously with 17 employees and a limited balance sheet, we can’t explore those opportunities all by ourselves.  So our goal in these negotiations and discussions, is to secure a partner, that will advance Doctor Bar-Or’s technologies further. We have one chance to get this right, so there’s really no reason to be in a hurry. We have a platform technology, we can make it inexpensively. We have a factory that can produce it for international sales, and we can do it in a way, where we could address, financially every major market in the world.

It feels weird to me to do a call and not open it up to Q&A, which is the situation we’re in today. But the confidentially agreements that we’ve signed are not an afterthought, they are not a formality. They are really serious legal instruments that are enforceable. Some of the documents we’ve just signed recently, as recent as in the last few days, it has taken months to get some of these confidentiality agreements signed, so ordinarily we’d open up the mic to Q&A, I think I’ve most of the questions in statements that were asked over the last few weeks. I’m going to end the call today by thanking you for your patience, your support, and I’ll ask you to enjoy the rest of your day. Thank you very much, have a nice day.