Ampio Shares To Rise In Advance Of Optina Data

| About: Ampio Pharmaceuticals, (AMPE)

Optina™ is effective in treating macular edema, a swelling of the retina that often leads to diabetic blindness, according to a statement by Ampio Pharmaceuticals (NASDAQ:AMPE) early on Monday. The company elected to conclude a Phase II trial of a twice-daily oral dose of Optina™ for the treatment of diabetic macular edema, or 'DME', ahead of schedule after collecting positive data from a preliminary analysis of patients enrolled in the study. The company will now be working with the FDA to determine the design of a pivotal trial in the U.S. under the 505(b)2 regulatory pathway.

A low-dose formulation of danazol, Optina™ qualifies for 505(b)2 new drug application (NDA) as a repurposed drug. This alternate route to a traditional NDA shortens the path to regulatory approval, saving the drug developer time and money. For Ampio, it means shareholders' monies are better allocated on the development of products that will sooner yield cash flows and a return on invested capital.

Ampio chose not to disclose details regarding the latest data on Optina™, instead promising "detailed analysis of the study results [..] pending the completion of data analysis by [the] CRO." The data, of course, could spark conversation among potential partners, according to an executive with Pfizer (NYSE:PFE) who asked to remain unidentified. The idea of Ampio partnering one or more pipeline product(s), however, shouldn't come as a surprise -- Ampio's Chairman and CEO, Michael Macaluso, told investors that the company was in discussions with numerous potential suitors during a conference call in January.

The low-dose danazol formulation is proprietary and protected by multiple patents in the United States and Europe. Branded as Optina™, the repurposed drug would become the first of its kind, where standard of care is a painful and at times redundant laser therapy. The treatment is also criticized for damage it causes the retina and for lacking resolution: in many cases, laser therapy becomes a repeat therapy for those treated for macular edema. The National Eye Institute provides a description:

Macular edema is treated with laser surgery. This procedure is called focal laser treatment. Your doctor places up to several hundred small laser burns in the areas of retinal leakage surrounding the macula. These burns slow the leakage of fluid and reduce the amount of fluid in the retina. The surgery is usually completed in one session. Further treatment may be needed.

Importantly, the problem is not eradicated with laser surgery. But another alternative exists. Intraocular injection of Lucentis is approved for DME in the EU, but used off-label in the U.S. Genentech, now a part of the Roche Group (OTCQX:RHHBY), is the maker of Lucentis, which is administered by an injection directly to the eye. Without mentioning that injections are required several times per year, or that Lucentis is relatively expensive and, according to Ampio, leads to "rare destruction of the eye due to complications related to the injection", it's easy to see why an oral therapy like Optina would not only be preferred, but could also answer a large unmet medical need. Diabetic macular edema affects 10% of all diabetics and Ampio estimates there are 25.8M living with diabetes in the United States alone.

Shares of Ampio will likely rise in advance of the release of complete data from the Phase II study of Optina in treating DME. Inevitably, the data will be positive, and likely highly statistically significant -- what other reason would Ampio have had to conclude ahead of schedule and begin prep work for a discussion with the FDA on a path to regulatory approval for Optina?

Disclosure: I am long AMPE.