The high-flying shares of Ampio Pharmaceuticals (AMPE) about hit their 52-week high of $9.21 just weeks after trading for under five bucks as multiple positive developments provided the needed catalysts to spark a share price run.
During that time, however, the short interest grew, and after a ten percent price decline on Wednesday, it looks like the shorts are winning the short term battle as shares have now settled at just under seven bucks.
With that in mind, the retracement in price may be opening up another buying opportunity for the longs. Ampio still has catalysts pending on multiple fronts before the end of this year, each with the potential of providing another spark for the trading shares, and each with the potential to help move this company to the mainstream from its current 'under-the-radar' status.
First, let's take a look at the pipeline catalyst that have come to light over the past weeks.
Ampio's most ready-for-market product, Zertane for erectile dysfunction, has received the bulk of attention of late. Results from a Phase III trial were recently published in 'European Urology,' while Ampio has continued to attract interest from multiple potential partners around the globe to market the product, 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™," noted Mr. Wingerter.
Proof positive of that interest came earlier this month when a licensing agreement with Daewoong Pharmaceuticals Co. Ltd for Zertane in South Korea was announced; a deal that will net Ampio millions in an up-front payment in addition to a 25% royalt rate on all future sales.
Daewoong also licensed the rights for a combination drug, combining Zertane with another erectile dysfunction drug - one that would simultaneously treat premature ejaculation and erectile dysfunction (ED) - and has agreed to conduct the trials necessary to bring that product to market in South Korea.
Ampio's game plan is to attract local partners who already have embedded influence in targeted regions, rather than seeking one major partner to cover the entire ROW market. Given that strategy, look for some additional deals similar to the Daewoong one to hit the wires over the coming quarters, if all goes according to plan.
Also on the Zertane front, the company announced this week that it has received notification from authorities in Canada of allowance of its two patent applications for Zertane in combinations with other erectile dysfunction (ED) drugs. This allows Ampio to move forward with plans to commercialize the combination drugs in Canada, similar to its plans in South Korea. And inn yet additional Zertane news, Ampio reported that an extension study attached to the previously completed Phase III trial confirmed the already solid safety profile of Zertane treatment.
All this illustrates a solid start for the commercialization phase of this company, although this could just be the beginning of an impressive string of news.
Ampio's lead product Ampion - which holds the potential to make a huge splash in the anti-inflammatory market - is currently being tested for osteoarthritis (OA) in the knee, and results from this trial are due shortly. This indication was chosen as the first for Ampion by Ampio because of the relative ease of fitting in treatment in between processes involved with the already-established standard of care for osteoarthritis in the knee. Should these results be positive, it may mark the beginning of a long string of testing and commercialization for Ampion.
Given that Ampion 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, the move to market may prove to be fairly quick, should the treatment be proven as effective in trials.
Watch for news on this front, as a major move into the anti-inflammatory market should significantly boost the future market potential of this company.
Next up is Optina. Optina is being tested as an oral treatment for diabetic macular edema (DME) and diabetic retinopathy. Optina is being repositioned as different dosage of the already-commercially-available Danazol, which already has a well-established safety profile on the commercial market. Again, the already-established safety profile should assist in Ampio bringing the product to the market in an expeditious manner, should it prove effective in trials.
With results due out later this year, Optina provides another key, short term catalyst for Ampio.
As the traditional prospective drug candidates approach the finalization of the trial phases, Ampio is also developing its ORP diagnostic devices which measure oxidative stress in patients. It's said that measuring oxidative stress may be more benificial than the standard measure of vital signs, especially in patients that may be suffering from critical ailments, such as heart attack and stroke.
The development of the ORP pipeline is also worth paying attention to.
Again, the short interest stood at about 1.4 million shares as of mid-September. A well-timed attempt at a hack-job on Ampio was also published - and then retracted - by a popular stock investing website right before the latest AMPE slide, which in my opinion might be a pretty good indication that the shorts were getting impatient with the rising share price and might now be playing their games and looking to cover ahead of the expected catalysts.
With that in mind, the lower the share price, the better the opportunity for the longs who are looking at the future potential of the Ampio pipeline on the open market.
The swings are to be expected in the speculative market, and it's up to each investor to take advantage of those times when those swings bring opportunity with them.
Keep and eye on AMPE, it's game time for results.
Disclosure: Long AMPE.
