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Ampio Pharmaceuticals (NYSEMKT:AMPE) CEO, Don Wingerter, agreed to an interview after we put a call through to the company for answers to questions that had arisen and, inevitably, led to volatile trading in the company's stock. Earlier, we addressed substantial criticisms a recent article had made, and proved the arguments to be quite poorly researched. The author of that article later relied on an unnamed urologist to discredit a premature ejaculation drug Ampio Pharmaceuticals has been developing. We asked Mr. Wingerter to address "unanswered questions" regarding Zertane™ and provide investors with an outlook for Ampio Pharmaceuticals as we head into 2012. Ampio Chairman, Michael Macaluso, contributed to our discussion, in an area that concerned him personally.

Timeless Wealth: Ampio Pharmaceuticals is developing 3 core products in Ophthalmology, Chronic Inflammation, and Sexual Dysfunction. Let's save the first two for later and talk about the latter and most clinically advanced - Zertane™.

Don Wingerter, CEO: Zertane™ is a special dosage and formulation of tramadol hydrochloride that was shown in Phase III trials to have a statistically significant benefit for patients who suffer from premature ejaculation (NYSE:PE). Our trials engaged over 600 patients and hit all efficacy endpoints. The efficacy we saw with Zertane™ was, as good, or better than what has been shown with the only other drug approved in the world for PE, which is Johnson & Johnson's (NYSE:JNJ) Priligy. J& J's Priligy has been launched in over 14 countries outside of the US. However, Priligy is an SSRI - a kind of anti-depressant - which means that it comes with some significant side effect warnings. Tramadol, on the other hand, is a well understood compound that would not have the same kinds of 'black box' warnings. [Author's note: The "black box" warning means users of the product may experience serious adverse events, including death. Priligy has a "suicide risk" warning.]

Tramadol is a centrally acting synthetic opioid analgesic. It is not scheduled in the U.S. and has been on the market for a number of years. In the analgesic setting it is taken at relatively high doses [200-400mg] every day for weeks or months, and as such may be associated with significant side effects and withdrawal symptoms.

Timeless Wealth: How does Zertanediffer from generic tramadol?

Don Wingerter: In our patented usage, the drug is taken sporadically and at a very low dose - 62 or 89 mg. At these doses, not only does it have excellent efficacy, as described in the European Urology publication1, but very few side effects. Our studies show that it can even be used with alcohol in moderation and shows no tendency to abuse.

The drug's safety profile was determined in two double-blinded, placebo controlled trials conducted in Europe, and in a follow up open-label 12 week study with the higher dose of Zertane™. No serious adverse events occurred in any of these studies. The main side effect observed with the high dose of Zertane™ was erectile dysfunction, which occurred in 0.9% of patients. No dependency was noted. The average use of Zertane™ in the open label study was approximately 2.3 tablets per week.

Timeless Wealth: Can you provide us with guidance as to the clinical and commercial development for Zertane moving forward?

Don Wingerter: A great deal of our focus for Zertane™ is outside the US. We have begun preparing the submission package for a "category 1" approval in Australia. This will benefit us in several ways. The registration process in Australia is fairly quick, relative to other highly regulated countries, and is documented to take about 300 days. The registration will be used to accelerate approval for our Korean partner [Daewoong] through collaborative agreements between the KFDA (Korea) and the TGA (Australia). And the process for final approval in Korea after the drug is registered in Australia will take only months, which means the drug could be on the market by 2013.

The combined technical document that we will create in this process can be used directly for submission in European countries and in a modified form to the FDA. Our regulatory partner, ERA Consulting, has decades of experience with submissions to all of these regulatory bodies.

We understand at present that our European data will be sufficient for approval in Australia and therefore have not currently made any plans to enlist additional trials on Zertane™, alone, at this time.

Countries such as China and the United States will require us to run additional clinical trials, if we choose to bring Zertane™ into those market(s). We will seek clarity from those regulatory bodies when most appropriate.

However, we have contracted to begin trials of our recently patented Zertane (PE)) and PDE5 inhibitor ED drug combination in Korea as soon as possible. [Author's note: PDE5 inhibitors include Pfizer's (NYSE:PFE) Viagra, Eli Lilly's (NYSE:LLY) Cialis, and Levitra, a collaboration between Bayer AG (OTCPK:BAYRY), Schering-Plough (now a division of Merck (NYSE:MRK) and GlaxoSmithKline (GSK)].

Timeless Wealth: A recent article attempted to peg Ampio to a biotechnology company that filed for bankruptcy in 2009. According to SEC filings, you served as CEO at one point, and later as a Director of that company, but resigned in 2005. What really happened at Isologen?

Michael Macaluso, Chairman: When Isolagen was introduced to me in 2000 it was virtually "broken." The FDA had shut down their commercial efforts, they were out of cash and on the verge of closing. I extended Isolagen credit along with other investors, to keep the company afloat until our due diligence was completed. I then invested and quickly refocused the company, starting by improving our relationship with the FDA.

When I resigned as CEO in September of 2004, Isolagen had a market capitalization in excess of $300,000,000, more than $100,000,000 in cash and equivalents, a pivotal trial in the FDA with an SPA, and a highly-institutionalized float. We had also built 3 autologous cell laboratories in England, Australia, and the United States and saw commercial revenues from England.

I resigned because our institutional investors, investment bankers, and the Isolagen Board of Directors, myself included, felt that a less entrepreneurial CEO - one with a pharmaceutical background - should lead the change. There were 5 CEOs in the interim between myself and the bankruptcy.

Some years after I left, the Isolagen therapy was approved by the FDA.

Timeless Wealth: Ampio successfully raised about $9 Million, according to a recent statement from your company. How will that capital be allocated, and more importantly, how will it be used to create shareholder value?

Don Wingerter: The capital will be used to continue our clinical development strategy. Within the next 6 months we intend to:

  • Complete the Ampion™ trial in Australia - Q1
  • Start the regulatory approval process for Zertane™ - Q1
  • Complete the Optina™ trial in Canada - Q2
  • Establish the trial design for Ampion™ with the FDA
  • Establish the trial design for Optina™ with the FDA
  • Continue to license Zertane™ for PE
  • Receive patents of PE/ED combination
  • Partner combination PE/ED treatment
  • Add to our Executive Team
  • Announce results from all ongoing trials

Following those first 6 months, our goals are to:

  • Begin a FDA clinical trial for Ampion™;
  • Begin a trial in Europe for Ampion™;
  • Bring pipeline drugs forward with composition of matter patents;
  • Continue licensing and partnering discussions and close some of those deals

Timeless Wealth: Taking a step back here - we discussed the idea of repurposed drugs, for instance Zertane, but Ampio is developing at least two others that follow a similar path to regulatory approval. What does 'repurposed' really mean and how is it central to the strategy at Ampio Pharmaceuticals?

Don Wingerter: Zertane™ and Optina™ fulfill the requirements for specific legislation referred to as 505 B 2 or equivalent in countries outside the U.S. The legislation sets specific restrictions but provides great advantages reducing both the size and duration of trials [and consequently cost]. As the proposed drug is based on an approved chemical entity only data relating to the changed use or dosage is presented. Regulatory bodies favor these drugs because generally there is extensive data on human use and any possible complications as compared to what happened with Vioxx™2. [Author's note: Merck withdrew Vioxx™, an anti-inflammatory drug, from the market in 2004 after safety concerns of an increased risk of cardiovascular events]

It also provides companies with at least 3 years of exclusivity. This is of great advantage to Ampio as during this phase additional patents will be granted giving the potential of up to 18 years of patent coverage for Optina.

Ampion™ is a biologic and covered by different guidance than drugs. These products are regulated more by the process of manufacturing than the product itself. Ampion™, in one format, derives from a minor filtration step added to the approved production of HSA, therefore most of the regulatory process is already complete. Only data relating to the additional "pain relief" claims needs to be derived from clinical trial data. We have human data now being produced in Australia and will bring this data to the FDA as the basis for pivotal trial discussions.

Timeless Wealth: Earlier this month, Ampio announced that the company acquired rights to a patented orally disintegrating tablet (ODT) drug delivery technology from Valeant (NYSE:VRX). Can you give us a briefing on this transaction and how it strengthens the company's product portfolio?

Don Wingerter: The ODT know-how and rights acquired from Valeant VRX complement perfectly the clinical data Ampio obtained from the Phase III clinical trials, allowing Ampio to advance Zertane for regulatory consideration much quicker. Our Phase III trials were run using tramadol in an ODT formulation. Additionally, the ODT formulation allows for rapid absorption in the mouth without the necessity of water and has the added benefit of a pleasant taste.

We estimate the ODT know-how and rights from Valeant may cut as much as eighteen months to two years from Zertane's development timeline. If Zertane is approved and moderately successful, those eighteen months to two years represent far more value than what we spent for the ODT know-how and rights.

Timeless Wealth: One last question - why does Ampio not list its ongoing clinical trials on clinicaltrials.gov?

Don Wingerter: Trials conducted outside of the FDA's jurisdiction do not need to be registered on clintrials.gov. Though it is always a good practice to do so, there are specific business reasons why it is not always advantageous. One such instance is when a product like Optina™ goes through patent examination and critical components of that application is something we'd prefer not to disclose, prior to publication. When the Canadian Optina trial was being established and approved by Health Canada, the patent application for the specific dose effect was not published by the U.S. patent office. Based on guidance from our patent counsel we chose not to register the trial on clinicaltrials.gov, which required complete disclosure including the dosage used in the trial. We opted to protect the company and its shareholders in this regard, until the patent process permitted such disclosure.

Our Australian trial [Ampion™] is registered on ANZCTR.org.au - the Australian equivalent of clinicaltrials.gov. A site that would contain virtually the same information is 'trialsaustralia.com.au', which again points to our Ampion study. Importantly, both trials are monitored and managed by independent third party CROs.

Timeless Wealth: Mr. Wingerter, Mr. Macaluso, thank you both for tending to our questions.

Author's End Note:

Roughly $9 Million was raised selling shares of the company's stock to institutional investors last week. The stock offered was priced at $4.25/share3, which is only about a 1.6% discount to the market price (closing price) as of December 23rd. No warrants were issued to these investors as part of the offering (in itself a rarity). First, if we haven't stressed this already - management truly exercised their fiduciary duty to shareholders on this deal. Second, for investors to fund Ampio at close to market means they are willing to accept more risk here than, they are traditionally willing to, elsewhere. This should be viewed as a tremendous vote of confidence from sophisticated investors.

References

  1. Summary of European Urology Article
  2. Reference regarding Merck's anti-inflammatory drug, Vioxx™
  3. Details can be found in this 8-K filing

Disclosure: I am long AMPE, MRK.

Source: Interview: Ampio Pharmaceuticals' CEO Tackles 'Unanswered Questions'