After a fairly quiet Thanksgiving week, Monday morning has produced a number of significant stories in the biotech world. One stock that is seeing some nice gains is Ampio Pharmaceuticals (NYSEMKT:AMPE).
Ampio Pharmaceuticals is a biopharmaceutical firm that develops innovative proprietary drugs for metabolic disease, eye disease, kidney disease, inflammation, sexual dysfunction, and CNS disease. One of Ampio’s key strategies is to actively explore partnership, licensing, and other collaboration opportunities to maximize the company’s product development programs.
There are three current candidates in Ampio Pharmaceuticals’ product pipeline.
- Zerfane: Used to treat sexual dysfunction
- Optina: Used to treat diabetic retinopathy and diabetic macular edema
- Ampion: Used to treat osteoarthritis of the knee
On Monday morning, Ampio Pharmaceuticals received Food and Drug Administration confirmation that the Spring Study could be considered pivotal. The Spring Study, also known as AP-003-A, was given the approval because of the fact that the study had an adequate number of enrolled subjects (329) and because it was well controlled through its use of normal saline.
The study showed that patients receiving Ampion demonstrated significant reductions in pain compared to the patients on the control arm (saline). Patients on Ampion demonstrated, on average, greater than a 40 percent reduction in pain from baseline. The study also met its primary endpoint (change in WOMAC score at 12 weeks).
Ampio Pharmaceuticals will now embark on its final pivotal trial, which will serve as confirmation of the 4-milliliter injection in roughly 500 patients. The trial is expected to start in January. Approval submission could then take place during the third quarter of 2014. Ampio shares are trading up approximately 5 percent on the news.
In addition to the Ampion study, investors should also pay attention to the Zerfane progress. Zerfane is an oral drug in late-stage development as a potential treatment for premature ejaculation. The active ingredient in Zerfane has been shown to delay ejaculation in prior studies.
The reason why Zerfane has a massive amount of potential is because there are currently no approved drugs in the United States for the treatment of premature ejaculation. The only available treatment is an SSRI antidepressant drug called Priligy, which has been shown to have serious side effects.
Priligy, originally known as dapoxetine, was originally developed by Eli Lilly (NYSE:LLY). Eli Lilly originally developed dapoxetine as an anti-depressant. However, unlike other selective serotonin reuptake inhibitors, dapoxetine is absorbed and eliminated rapidly in the body. The fast-acting element of the drug makes it suitable for the treatment of premature ejaculation, but not depression.
After several years, Eli Lilly sold the rights of dapoxetine to Johnson & Johnson (NYSE:JNJ). While dapoxetine has dominated the market, it suffers from several serious side effects such as nausea, dizziness, dry mouth, headache, diarrhea, and insomnia. These side effects make it easier for a competitor like Ampio’s Zerfane to come in and take a large share of the market.
In 2010, dapoxetine (now known as Priligy), generated roughly $70 million in U.S. sales. In 2011, that number jumped to roughly $95 million. If Ampio can successfully commercialize this product, the benefit to the company’s valuation could be substantial.
Over the past year, shares of Ampio Pharmaceuticals have soared by more than 100 percent thanks to the improved prospects of the company’s candidates in development. Most recently, shares sold off after The Street’s Adam Feuerstein reported that the company may need to complete an additional study for its eye drug called Optina. Even if true, Ampio ended the third quarter with $32 million in available cash, which would be more than enough to fund the additional trial without diluting shareholders. In addition, the prospects of Zerfane and Ampion appear extremely promising and a successful approval/commercialization in either of them should catapult the shares higher.
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