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Ampio Good Bet To Be Big Winner In Short And Long Term

Jul. 03, 2013 11:18 AM ETD, REGN, ACAD, PFE2 Comments
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Seeking Alpha Analyst Since 2013

Ampio Pharmaceuticals, Inc. (AMPE) has been a very controversial company since December 2011 when naysayer's like "The Banker" began discrediting the company's pipeline and their management. Then Cavalli and others showed up in May of 2012 and shared a different story. Shares reversed as the opposing story got out and since then, there has been a classic tug of war between the bulls and the bears that has created the kind of volatility that traders love. Shares have been in a slightly upward trend for the past 10 months with large institutional buying picking up indicating there may actually be some steak to the sizzle. Many cheerleaders of Ampio tend to be excited by just one of the three drugs that are in or about to commence trials, but the fact remains that there are three . . . and they are all very advanced.

Aside from any stories that are just speculation, it cannot be denied that Ampio is actually in pivotal phase III clinical trials with their lead drug, Ampion, that if successful, could be a blockbuster of major proportions. The first indication for Ampion is for the large market of osteoarthritis of the knee but it doesn't stop there. Ampion is a non-steroidal anti inflammatory that appears to have no adverse side effects. And based on prior trials, it appears to be a highly effective anti inflammatory. Consider that Ampion could have a much wider use and could become a major player in the $65 billion dollar anti inflammatory market. The good news is that the current phase III trial will tell the truth before the end of this year. That is a short time for such a potentially big event.

Optina is Ampio's eye drug for the large market of Diabetic Macular Edema, DME, is in a phase IIb trial that, if successful, could wind up accelerating into a pivotal phase III trial. This means that if Optina is successful, it could wind up being another blockbuster and perhaps even cause some problems for Eylea by Regeneron (REGN) because Eylea is an injection into the eye and Optina is a pill. We don't know which one works better yet, but the current trial is going to tell very soon and based on the actual mechanism of Optina, it appears that Optina may gain the edge.

Zertane has been the center of a great deal of controversy as well. Some say that Biovale abandoned Zertane because they had difficulties with it. The truth appears to be that Biovale was merged into Valeant and the company made an internal decision to halt all R&D including Zertane. Supporting this view is the fact that at the same time, Valeant also abandoned Pimvanserin that is now Acadia Pharmaceutical's (ACAD) successful lead drug for Parkinson's Disease Psychosis. Pimavanserin all by itself has rocketed Acadia from $1.36 to over $20.00 in only 12 months.

Ampio has repeatedly mentioned that they have been working with a big pharma partner for the licensing of Zertane but so far no announcements have been made. The company received a favorable decision from the FDA allowing use of the Patient Outcome for Premature Ejaculation. Ampio is the only company in the world with this approval that now makes it possible to run a successful phase III pivotal trial. I would not be surprised if a major player like Pfizer (PFE) comes along and makes them a deal they can't refuse. Just think, Pfizer owns the blockbuster Viagra that came off patent. Ampio owns the world wide patent rights to Zertane ED that is combined with Viagra. This acquisition would put Pfizer back on top of the Erectile Dysfunction heap.

Then there is the ORP diagnostic device that most investors haven't yet realized the potential. The Oxidation Reduction Potential diagnostic appears to be another blockbuster product, but a diagnostic rather than a drug.

And there is also NCE001 that is quietly advancing to trials that could happen fast and surprise big because the company tells us they will be pointed to the orphan drug markets of Inflammatory breast cancer, Renal Cell Carcinoma and multforme glioblastma where there are no treatment options. NCE001 is a new class of cancer treatment drugs called phosphatase activators as opposed to kinase inhibitors.

Another interesting note is that the many accusations and predictions of insider selling never materialized and the predicted "dump" never happened. Predictions have also been made that the company will offer shares and drive the price down. Here we are a year later, and it still has not happened. Of course, like all companies, there will come a time when Ampio needs to raise adequate capital to grow, but I predict the price will be substantially higher and buyers will be eager.

Ampio Pharmaceuticals is a good bet to be a big winner for more than one reason. First, two blockbuster drugs are in pivotal trials where results will be known soon. One blockbuster drug is ready for its pivotal phase III trial that will be very short in duration. Trial results for the ORP device will be known this year. News or an announcement of a major licensing deal with a big pharma company appears imminent. NCE001 is overdue for some news about its development. And the company has a treasure chest of over 100 compounds that can be advanced as soon as management is ready.

Ampio shares have been in no man's land for the past month, unable to trade above $7 and unable to trade below $5. Clearly buyers and sellers are placing their bets but the current lull of low volume and volatility may not last much longer because there are too many forces ready to ignite this company. Anything can happen, but with the plethora of potential sources for good news, it appears that Ampio shares are stacked in favor of the bulls.

The risk to long investors is that the company may not be able to raise adequate capital to remain an ongoing concern. Clinical trials may fail. The risk to short investors is that the company may succeed in even just one of its multiple endeavors and send shares flying to record highs in a nanosecond..

Place your bets!

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