Ampio Provides a Healthcare Sector Opportunity Amid a Tantrum of Selling

| About: Ampio Pharmaceuticals, (AMPE)

As one of few components of the NASDAQ Healthcare Care Index that saw higher trading on Wednesday, Ampio Pharmaceuticals (NASDAQ:AMPE) fell toward the close, as the Dow Jones Industrial forfeited 519 points and equities across the board sold off sharply. Sentiment quickly became the determinate factor guiding shares of the emerging biotechnology firm lower. The NASDAQ Health Care Index ended Wednesday’s session at its lowest point since September 2010, suggesting that at least some of its components may be undervalued.

Ampio Pharmaceuticals offers investors a strong IP portfolio with over 190 patents (including applications), which protect the firm’s discovery of new uses for previously approved drugs and new molecular entities (NMEs). Central to its strategy is drawing on approved compounds with extensive safety profiles that shorten the path to regulatory approval for product candidates (observe below) addressing large, in certain instances unabated, and otherwise uncompetitive markets. The company explains:

By concentrating on development of new uses for previously approved drugs, approval timelines, costs and risk of clinical failure are reduced because these drugs have strong potential to be safe and effective while their shorter development times can significantly increase near term value. (Ampio Pharma)

Ampio Pharmaceuticals Pipeline

(Click chart to enlarge)


Ampion™ is an NME being developed as a non-steroidal injection and oral drug for the treatment of diseases involving inflammation. A Phase 1B trial for patients with osteoarthritis of the knee is under way to demonstrate a reduction of pain and swelling and improved range of motion. The three arm, placebo controlled, 60-patient study taking place over two sites in Australia is set to conclude in September, with results anticipated by the fourth quarter of this year (source).

Ampion™ is found in an already approved product, Human Serum Albumin (HSA), which is the primary component of Pfizer’s (NYSE:PFE) Ansaid, used to treat mild to moderate pain and inflammation caused by osteoarthritis. As a naturally occurring human biologic, Ampion™ is expected to have a shorter path to market than a traditional NME (source). This suggests that following the Phase 1b study, a well-designed Phase III trial is all that will be required for regulatory approval of Ampion™, provided efficacy is shown.
The addressable market is expected to reach $80 Billion this year, according to a presentation (pdf) by Ampio Pharmaceuticals.

Optina, Vasaloc

Optina and Vasaloc are repurposed danazol used to treat complications arising in patients with diabetes. Optina™, a low-dose of danazol, is orally administered to treat diabetic macular edema, or DME, and neovascular age-related macular degeneration, or wet AMD. Optina injections in the eye. Management says it offers a more affordable alternative to Roche’s (OTCQX:RHHBY) Lucentis and Avastin, and is orally administered.

Existing therapies for DME and wet AMD include focal and grid laser therapy, which is the current standard of care, as well as photodynamic therapy, surgery, and intravitreal treatment for AMD using Lucentis. Lucentis is costly compared to alternative injection therapies. Avastin is currently approved only for cancer treatment, but it is being used off-label by ophthalmologists to treat DME and wet AMD. (Prospectus)

A Phase II study is under way to assess the efficacy and safety of two oral doses of Optina™ in patients with early signs of DME. The trial is expected to end in Q4 2011, which will move the compound one step closer to a DME and AMD market that was worth over $2.4 billion in the U.S in 2009 (BCC Research).
Vasaloc™, also a low-dose danazol, is an orally administered compound designed to treat diabetic nephropathy. When untreated, diabetic nephropathy leads to kidney damage or renal failure. Ampio plans to launch a Phase II trial to evaluate Vasaloc™ (Prospectus). The trial is expected to commence this quarter; thus, investors can anticipate further guidance from management, shortly.


Ampio Pharmaceuticals’ Zertane™ addresses an unmet problem experienced by at least 23% of men. Zertane™ is an oral drug in successful late stage development as a proprietary treatment for premature ejaculation (PE), a condition four times as common as erectile dysfunction (ED). PE is well-cited to have a major impact on the quality of life for men and their sexual partners. At this time, only Priligy, an orally administered anti-depressant marketed by Johnson & Johnson (NYSE:JNJ), is approved for the treatment of PE in certain European counties. The standard-of-care treatment for PE is behavioral therapy.

Earlier this year, Ampio concluded a 604 patient Phase III study spanning 61 sites in 11 countries in Europe that showed efficacy of Zertane™ in treating PE, with no serious adverse events (source). Essentially, Zertane™ was found to be more effective in treating PE than Priligy. In light of the positive results, management laid out the following goals for monetizing Zertane™:
  • Aggressively pursuing regulatory approval in Europe
  • Strategically engaging distributors in Europe and Asia
  • Commercializing Zertane™ in conjunction with erectile dysfunction drugs, thereby expanding the drug’s application
Ampio Pharmaceuticals’ drug candidates address markets where needs are largely unmet. For those markets where competitors exists, they are far and few or lack the efficacy patients seek in a solution. Ampio is developing products with limited side-effects that effectively tackle multi-billion dollar problems. And they’re doing so on a small budget; allocating capital prolifically. Management has stated that cash and equivalents will last through to the fourth quarter of 2012 – long enough for investors to find out how at least four ongoing and planned clinical trails turn out.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AMPE over the next 72 hours.

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