Ampio Pharmaceuticals On A Roll With New Licensing Agreement

Includes: AMPE
by: VFC's Stock House

Ampio Pharmaceuticals (NASDAQ:AMPE) recorded another solid week last week, breaking through the nine dollar price-per-share barrier while continuing an uptrend that started in mid August. The uptrend has been supported by a string of encouraging news releases over the past month that may be attracting new investor attention to this company, just at a time when significant catalysts are coming due.

Ampio's market strategy is built on bringing already-approved products to market for the treatment of new indications, a strategy which can greatly reduce the time and costs associated with developing brand new, and unknown drugs. Multiple clinical studies are underway testing Ampio's repositioned products in new indications, and the remainder of the year should see some of the results from those trials hit the press wires.

Of immediate importance, however, are the developments surrounding Zertane.

Zertane is already on the market as a pain medication, but additional research revealed that it also has potential as a treatment for premature ejaculation (PE). Results from a Phase III trial for the PE indication have been published in 'European Urology,' a publication with a significant global reach in its field, and Ampio has attracted its fair share of interest in Zertane from potential partners from around the globe, according to comments made by Ampio's CEO Don Wingerter in a recent press release.

Since our June 17, 2011 press release summarizing the positive clinical results of the two European Phase III trials of Zertane™, we have been contacted by numerous companies from all regions of the world seeking to license Zertane™.

That interest is quickly turning into results.

Earlier this month Ampio announced a licensing and development agreement with Daewoong Pharmaceuticals Co. Ltd., providing Daewoong with exclusive rights to market Zertane in South Korea for the treatment of PE, Additionally, Daewoong will hold rights for a combination drug, combining Zertane with another erectile dysfunction drug, to simultaneously treat premature ejaculation and erectile dysfunction (ED).

According to the terms of the deal, Ampio will receive a multi million dollar upfront payment from the deal, with regulatory and sales related milestones also included. Ampio will also receive a royalty stream equal to 25% of net sales, less Ampio’s transfer price. Furthermore, Daewoong plans to mount an aggressive sales and marketing campaign for Zertan and will also fund a full Phase III clinical trial for Ampio’s follow on combination PE/ED drug.

Given Daewoong's influence in South Korea, this is an encouraging opening salvo for Zertane licensing deals, as Daewoong's upfront committment could be perceived as confidence in the product's potential.

With this deal landed, Ampio will look to negotiate similar deals in other of the 32 countries where Zertane is patent protected.

The plan, according to recent statements by company officials, is to seek individual partners with regional influence, rather than going with one large global partner who may or may not hold the same influence as local distributors in any given area or country. In South Korea, Daewoong ranks #1 in prescription drugs sold and #2 in manufacturing, and the deal is a good example of the company's international partnership strategy reaching fruition.

While the news surrounding Zertane is taking up most of the recent attention, let's not forget about the rest of the Ampio pipeline, which is also expected to produce results over the coming months.

Results from a trial testing lead product Ampion for osteoarthritis (OA) in the knee are due shortly. If this trial is successful, it could catapult Ampion straight into the heart of the $80 billion anti-inflammatory and autoimmune disease markets. The move to market penetration could come relatively quickly with Ampion, given that it is a biologic - a molecule already produced by the human body (as albumin) - and since it has an already-established safety profile in human treatment.

Anticipation of these results could be another reason why Ampio is attracting some new attention these days.

Results could also come by the end of the year from an Optina trial taking place in Canada.

Optina is being tested as, an oral drug for the treatment of diabetic macular edema (DME) and diabetic retinopathy. It has been repositioned from Danazol, which has already been commercially available for years and - again - already has an established safety profile, making its time-to-market potential significantly lower than for new drugs.

This trial provides another key, short term catalyst for Ampio, at a time when developments are moving swiftly on multiple fronts.

In addition to the repositioned products in the pipeline, Ampio has a pipeline of diagnostic technology being developed, as well. If products from this side of the house reach approval stage, they could quickly change the face of how a patient's vital signs are measured. Rather than using the routine standards of today's methods of checking for vital signs, Ampio's ORP diagnostic device measures total oxidative stress, which may prove more beneficial and thorough for patients being seen for indications such as heart attack and stroke.

Abnormal ORP results are closely associated with poor outcomes in critically ill patients, which offers a wide scope of potential applications should this device receive regulatory approval.

Clinical studies for the ORP device are ongoing, but well worth watching.

It looks as if the potential of Ampio and its quick-to-market strategy is now being uncovered. With quite a few key developments ready to play out, there might be a lot more to come from this company, whose stock price has nearly doubled in just over a month's time.

Disclosure: Author holds a long position in AMPE.