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Item 2.05. | Costs Associated with Exit or Disposal Activities. |
On August 2, 2022, Ampio Pharmaceuticals, Inc. (the “Company” or “Ampio”) committed to a reduction in force that will result in the termination by August 31, 2022 of 10 of the Company’s current 18 employees, or approximately 55.5%. As part of this reduction, four non-terminated employees have been offered conditional retention and severance arrangements with the Company pursuant to which it is expected that they will continue to provide services for a period ending December 31, 2022 in exchange for retention and severance payments should the full term of service be completed, during which time the Company and its Board of Directors (the “Board”) will continue to actively evaluate and monitor the Company’s near-term personnel needs based in part on the Company’s financial status and the Board’s review of strategic alternatives.
The Company’s decision to engage in this reduction results from the Board’s determination not to pursue the continued development of Ampion as part of its review of strategic alternatives. At this time, the Company is discontinuing development of Ampion for all indications and discontinuing most other development activities pending conclusion of the strategic alternatives process. The reduction in force is a measure to manage costs and conserve cash resources with the goal of maximizing the opportunities available to Ampio during the Board’s review of strategic alternatives.
The Company expects to record a charge of up to $425,000 in the third quarter of 2022 relating to the reduction in force for the employees being terminated by August 31, 2022. These charges are primarily one-time severance and termination benefits in cash. The Company also expects to record a charge of up to $355,000 beginning in the third quarter and continuing through the fourth quarter of 2022 relating to the retention and severance arrangements described above. The actual severance, termination and retention benefits to be paid will depend on the employees remaining employed at August 31, 2022 and December 31, 2022, respectively. The foregoing estimated amounts do not include any non-cash charges associated with stock-based compensation. The Company expects to recognize a stock-based compensation expense related to vested awards and does not anticipate modifying the affected employees’ stock awards to accelerate the vesting of such awards or to otherwise modify such awards in a manner that would result in such additional charges.
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Item 7.01. | Regulation FD Disclosure. |
On August 3, 2022, Ampio issued a press release containing a letter to Ampio’s stockholders from Michael A. Martino, Chief Executive Officer, and Kevin Buchi, Chair of the Board. Within the stockholder letter, the independent special committee of the Board (the “Special Committee”) summarized the results of its previously announced internal investigations. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
As the Company announced on May 16, 2022, the Special Committee has been conducting internal investigations focused primarily on (1) the statistical analysis of Ampio’s AP-013 clinical trial and (2) unauthorized provision of Ampion, an investigational drug that is not approved by the Food and Drug Administration (“FDA”), for use by individuals not participating in clinical trials (“unauthorized use”). These investigations are now completed and the investigations are summarized below.
Through outside counsel, the Special Committee has engaged in extensive fact finding, including interviewing numerous individuals and reviewing documents and emails relating to the AP-013 clinical trial. In connection with the unauthorized use investigation, the Special Committee also reviewed documents, conducted interviews, and reviewed other information regarding the provision and unauthorized use of Ampion. The Special Committee committed significant resources to these endeavors and did not impose material limitations on the investigations’ scope, timing, or access to information.