RS: I'm looking at Ampio Pharmaceuticals Inc. (AMPE:NASDAQ). We recently raised our price target to $12, a 12-month target. The company is currently trading at about $6. When we initiated coverage, the stock was trading at less than $4, so we've seen a pretty decent increase.
We think there is a lot of misinformation out in the blogosphere about this company. A lot of people like to trash Ampio, and, in our view, this company doesn't deserve any of the criticism. Various commentators have stated that the company's clinical-stage candidates do not target validated markets, which is untrue. Knee osteoarthritis, premature #$%$ and diabetic macular edema are all opportunities worth hundreds of millions of dollars individually. There has been criticism of the company's clinical proof-of-concept data, which we believe denotes a poor understanding of the principles underlying statistical analysis and the mechanisms of action for Ampio's lead agents.
Ampio is a classic example of how a company can develop drugs in a cost-effective and capital-efficient way. All three of Ampio's clinical-stage drug candidates are already approved in the U.S. for use in other indications, and Ampio is developing these agents for new uses.
Ampio has a drug called Zertane (tramadol), which is being developed for the treatment of premature #$%$. Tramadol is widely utilized as a nonsteroidal painkiller. Its second drug candidate, Optina, is a low-dose formulation of danazol, which was originally commercialized in the 1970s as a treatment for endometriosis. The new formulation is a proposed treatment for diabetic macular edema. Its third drug candidate is Ampion, which is a cyclic peptide derivative of human serum albumin. Albumin has been used for a variety of ailments for a very long time. Ampion is being developed, at least initially, for the treatment of pain associated with osteoarthritis in the knee.
TLSR: Ram, this company's market value is about $226M. How much value is there in these repurposed drugs?
RS: From our perspective, the market could be worth hundreds of millions of dollars per year. Currently, the financial community is giving Ampio no credit whatsoever for its oxidation reduction potential diagnostic platform (for use in the diagnosis of serious inflammation and oxidative damage in patients who have suffered heart attacks and strokes, as well as other indications). Ampio has three separate shots on goal, plus the diagnostics, and it doesn't spend much money. Its clinical development pathway is very cost-effective for all three drugs because none of the programs require massive evaluation time periods. We're talking about clinical trials that typically last less than a year. Safety profiles are not going to be a problem because all of these compounds have been around for years and are well known. Plus, Ampio is using the drugs at significantly lower concentrations than in their current indications.