Seeking Alpha
What is your profession? ×
Growth, momentum, long-term horizon, newsletter provider
Profile| Send Message|
( followers)

With multiple near term catalysts coming due, Ampio Pharmaceuticals (NYSEMKT:AMPE) may be on the verge of making a big splash in the health care sector.

Ampio brings a unique approach to the plate in the health care sector, as its strategy of repositioning already-approved drugs to treat new indications reduces the risk/reward involved in bringing its products to market and, because the drugs have already been deemed as safe in previous trials and in commercial care, also drastically reduces the expected time frame for approval. With the product candidates already on the market for commercial use, the existing safety data speaks for itself and makes new safety trials, for the most part, irrelevant.

The company's founders and managing directors have built a solid and experienced team and are exercising a plan to bring multiple repositioned products to market. Each has the potential to treat huge unmet medical needs, each is being primed to infiltrate multibillion-dollar markets, and the pipeline gives the company multiple "shots on goal" (as noted in a recent company presentation) for success.

The point to emphasize, again, is that these drugs have already been tested and proven safe in human trials and on the commercial market for other indications, so the only key for Ampio is to prove that they work in treating the new indications. This gives Ampio a "quick-to-market" edge over other companies that are at similar stages of development.

While building on this strategy, Ampio has initiated a total of six clinical studies and is preparing to launch a seventh. Over 190 patents have also been accumulated along the way, positioning Ampio to carry out its game plan over the long term, while also looking to boost shareholder value by bringing new products to market over the short term.

On the finance front, Ampio carries no debt, a rarity for a company at the developmental stages. Due to overhead numbers that are significantly lower than those of other developmental companies, there is enough cash on hand to last into the fourth quarter of 2012, by which time the pipeline might be positioned for breakthroughs on multiple fronts.

Let's take a look at the pipeline, and see where those breakthroughs might come from:

Ampion has been identified by the company as its lead product, and should it go so far as the market, it could be huge. This product looks to target the anti-inflammatory and autoimmune disease markets - markets expected to reach a combined $80 billion in 2011 - and the most encouraging part for the company and its investors is that Ampion is a biologic, meaning that it is a molecule already produced by the human body (as albumin), and already has an established safety profile.

Since albumin is already commercially available and has that established safety profile, the company is optimistic that it can take this product to market, first as a treatment for osteoarthritis in the knee.

Ampio chose to progress against osteoarthritis in the knee (Ampion-in-Knee or AIK) as its first path toward regulatory approval for a number of reasons, the primary being that OA is a largely common disease, and finding patients to fill a trial would not likely be a problem. A trial is currently underway in Australia, from which results are due by the end of the third quarter of 2011. Any success from this trial will open doors for Ampion on a much broader scale and position the product to potentially infiltrate the larger anti-inflammatory market as both an oral and injectible treatment for a large number of indications.

Next up on the company's agenda following the AIK trial is to position Ampion as a potential treatment for rheumatoid arthritis, as an anti-rejection therapy for organ transplants, for multiple ocular inflammatory conditions and as a treatment for post-chemotherapy inflammation.

On a larger scale, most anti-inflammatory medications of today are accompanied by side effects, and with the medical community always looking for a new breakthrough, at a time when many are searching for a new anti-inflammatory, Ampion could be positioned to make a huge dent in the market if the developmental stage progresses as planned.

Given that Ampion is already developed by the body naturally, it's assumed that its safety profile should be far superior to anything else currently on the market.

Keep an eye out for the upcoming results release. Ampion could hold the most forward-looking potential of all the products in Ampio's pipeline.

Next up is Optina, an oral drug for the treatment of diabetic macular edema and diabetic retinopathy that is being repositioned from the already-approved Danazol. It was found that Danazol, when used in very low doses, actually reverses its effects when used at higher doses and was therefore discovered to have applicable use in treating the eye conditions that can occur as a result of diabetes.

Following the Ampio strategy for success, this product is also being repositioned from a previous approval to treat a potentially huge market as an unmet medical need. The ophthalmic pharmaceutical market is expected to reach $14 billion by 2012, according to a recent Ampio presentation, and Optina is primed to take advantage of that market should the ongoing Canadian Phase II trial turn out positive.

Since Danazol has already been on the market for more than two decades, the safety, manufacturing and control processes are already established, marking a swift shift to commercialization for Ampio, should the early successes in treating diabetic macular edema continue. There have never been any adverse events or serious side effects reported at the Danazol dosage required for Optina treatment, another fact that bodes well for an ultimate approval.

Ampio plans to devise a regulatory path for approval with the FDA, most likely in early 2012, pending the outcome of the ongoing Canadian trial. Results from this trial are expected by the end of this year.

Next up on the pipeline agenda is Zertane. This product, again, is being repositioned from its existing use a pain drug to treat premature ejaculation on an as-needed basis. Already tested and proven as effective in a successful multi-country Phase III trial, Ampio is addressing the required international regulatory paths to approval, primarily in Europe and Asia; the United States does not officially recognize premature ejaculation as a medical condition, making an overseas push the most logical option for progress.

With extensive data already supporting Zertane's use, effectiveness, and safety, it could make an immediate splash in the sector, if the regulatory approvals in various countries pan out. Additional applications for Zertane use are also being investigated and planned for the long term.

The management team at Ampio Pharmaceuticals has devised, and is now actively carrying out, its quick-to-market war plan and, at the same time, is targeting multiple billion-dollar industries. Should any of these products make it to market, let alone a few of them, then the current market cap could be due for a well justified upturn.

The game plan is picking up its pace and the company's enthusiasm is growing as key milestones are appearing in the rear view mirror quarter-after-quarter.

Already in 2011, a few of these key milestones were surpassed:

The Zertane trial was completed, and others were initiated, while the company's stock received a Nasdaq listing in May and was approved for inclusion in three Russel indexes in June.

In 2012, look for another round of trial results and possible licensing and joint venture deals to advance these products to market.

With a general market downturn in full effect, companies such as Ampio may be trading for decent discounts when compared to where they were just months ago.

It's up to each investor to conduct the due dilligence necessary to find the potential good deals out there. With AMPE's strategy of repositioning already-approved products with established safety profiles, the risk/reward looks more attractive in this market as the path toward success could be a lot quicker for this company than others in the sector at similar stages of development.

This could be the year that the Ampio story starts getting out.

Disclosure: No position. VFC's Stock House has not been compensated to provide coverage of AMPE.