Ampio Pharmaceuticals(AMPE) - 2019 Q3 - Quarterly Report

Financial Performance - The net loss for the three months ended September 30, 2019, was $7,219,215, compared to a net income of $5,801,220 for the same period in 2018, reflecting a significant decline[15]. - The basic net loss per common share for the three months ended September 30, 2019, was $(0.05), compared to a net income of $0.06 per share in the same period of 2018[15]. - Net loss for the nine months ended September 30, 2019, was $12,610,083 compared to a net income of $32,460,894 for the same period in 2018[19]. - For the nine months ended September 30, 2019, the company recognized a net loss of $12.6 million, compared to a net income of $32.4 million for the same period in 2018[112]. - The company expects to incur net losses for at least the next several years, indicating ongoing financial challenges[6]. Operating Expenses - Total operating expenses for the three months ended September 30, 2019, were $5,172,679, up from $1,940,298 in the prior year, indicating a 167% increase[15]. - Research and development expenses for the three months ended September 30, 2019, were $3,427,985, compared to $1,184,194 for the same period in 2018, representing a 189% increase[15]. - General and administrative costs increased by $989,000, or 130.7%, for the 2019 quarter compared to the 2018 quarter, totaling $1.7 million[116]. - Operating expenses increased by $3.2 million from the 2018 quarter to the 2019 quarter, primarily due to a $2.2 million increase in research and development costs[111]. Cash and Capital Resources - Cash and cash equivalents at the end of the period were $8,044,199, down from $8,672,062 at the end of September 30, 2018[19]. - The company raised gross proceeds of $12.0 million through a public offering of its securities during the nine months ended September 30, 2019[36]. - The company expects to sustain operations into the first quarter of 2020 based on current cash resources and an average cash burn rate of approximately $800,000 per month[36]. - The company anticipates needing to raise additional capital or enter into licensing agreements to fund further development and regulatory activities[125]. - The company projects a cash burn rate of approximately $800,000 per month for fixed expenses and $1.1 million per month for regulatory and clinical trial costs[125]. Regulatory and Development Activities - The company has received a Special Protocol Assessment (SPA) agreement from the FDA for its product candidate, Ampion, although this does not guarantee approval[8]. - The company is highly dependent on the success of Ampion, and failure to obtain regulatory approval could significantly harm its business[6]. - The company is focused on the development of Ampion for treating severe osteoarthritis, with a pivotal trial (AP-013 study) that has finalized patient enrollment at 1,034 patients[102][108]. - The FDA provided a Special Protocol Assessment (SPA) agreement for the AP-013 study, indicating concurrence on the trial design necessary for regulatory submission[102][108]. - The previous pivotal phase III clinical trial (AP-003-A) showed a statistically significant reduction in pain of greater than 40% from baseline at 12 weeks for patients receiving Ampion[106]. Equity and Stock Information - The company issued 2.1 million Placement Agent Warrants at an exercise price of $0.50 in June 2019, and 20.0 million investor warrants at an exercise price of $0.40 in August 2018, with a total fair value of $8.2 million as of September 30, 2019[63][66]. - The Company completed a public offering in June 2019, issuing 30.0 million shares at $0.40 per share, generating gross proceeds of $12.0 million[69]. - The Company had 5,913,665 stock options outstanding as of September 30, 2019, with a weighted average exercise price of $1.34[80]. - The Company granted 2,052,500 stock options at a weighted average exercise price of $0.58 during the nine months ended September 30, 2019[78]. - The Company has 3.7 million shares available for future equity awards under the 2010 Plan as of September 30, 2019[77]. Liabilities and Commitments - The company has total commitments and contingencies amounting to $7.672 million, with significant obligations in clinical research trial obligations of $4.319 million and employment agreements totaling $1.482 million[49]. - The company recognized a lease liability of approximately $1.7 million and a ROU asset of approximately $1.2 million upon adopting ASU 2016-02 on January 1, 2019[28]. - The total lease liability recorded on the balance sheet as of September 30, 2019, is $1.530 million, with a current portion of $253,000 and a long-term portion of $1.277 million[60]. - The company reported a derivative loss of $1,232,925 for the nine months ended September 30, 2019[19]. - The company incurred costs related to the sale of common stock in connection with the public offering amounting to $1,243,372[19]. Market and Financial Risks - The volatility in financial markets has made equity and debt financing more difficult to obtain, impacting small capitalization companies like the company[126]. - If funding is not secured, the company may need to delay or reduce the scope of development programs for Ampion[127]. - The company has not generated any revenues or profits to date, raising substantial doubt about its ability to continue as a going concern[35]. - The company does not have off-balance sheet arrangements or relationships with unconsolidated entities[128]. - The company is not currently exposed to material market risks from financial instruments or fluctuations in interest rates or commodity prices[129].