Ampio Pharmaceuticals Inc. (NYSEAMERICAN: AMPE) announced today that it is awaiting a decision from the FDA to rule whether or not its last phase 3 clinical trial was to be considered a pivotal trial.  The widely anticipated decision is expected by mid-December.  The company had recently concluded a meeting with the FDA’s statisticians and will report to a review panel including reviewers from the Office of Tissue and Advanced Therapies (OTAT).

In August the company slipped 85%+ on news that they might have to do another clinical trial.  It was a $300 million market cap fully diluted.  The stock is on the move today as investors see a higher likelihood that the OTAT will reverse its finding from July 2018 meeting.

From the market reaction it appears that hope has returned to Ampio Pharmaceuticals Inc (NYSEAMERICAN: AMPE) that they might be successful in turning the mindset of the FDA and the review panel.  This is a very interesting story to follow because the FDA is typically very reticent to change their findings, but since AMPE’s appeal and informal meeting has made considerable progress.  In the last corporate update they listed 4 major turnovers that were supportive of their BLA filing.  Investors need to keep in mind that the holy grail for AMPE is for the FDA to simply give them the greenlight to file the BLA.  That signals to pharma a shovel ready drug project.

1. On August 16, 2018, OTAT reaffirmed that “FDA considers AP-003-A to be an adequate and well-controlled clinical trial that provides evidence of the effectiveness of Ampion. AP-003-A can contribute to the substantial evidence of effectiveness necessary for the approval of a BLA.” Over 2,000 patients now support the substantial evidence necessary for the BLA.
2. The AP-003-C OLE study was designed to support the safety and tolerability of repeat injections of Ampion (up to five injections) over the course of at least one year. No serious drug-related adverse events have been reported, and all patients demonstrated a sustained reduction in pain over the course of the trial.
3. On September 27, 2018, OTAT provided a favorable response, with no areas of dispute, in support of CMC for the Ampion BLA. Agreement was obtained “on the CMC data requirements for BLA and on the data presented for analytical characterization, commercial release specifications, and potency of Ampion drug product.”
4. The Company is continuing discussions with the FDA to determine if the pivotal AP-003-C study is the final trial required to support the Ampion BLA. Should another trial be required, the Company will move quickly to meet the FDA requirements under a Special Protocol Assessment (SPA).

The final piece of AMPE’s BLA puzzle could come within 2 weeks.  The unusual part of this story is that the stock isn’t up more on this news.  Given the massive shift at the FDA classifying the AP-003 trial as pivotal appears to be better than a coin flip.  Prior to the FDA letter in July requiring an additional clinical the trial the stock dropped from a $300 million market cap to about a $45 million.  Given the greater likelihood and almost telegraphing of an FDA approval the market has only moved $15 million in market cap to approximately $60 million.  It appears that most market participants are still thinking there is only a 20% chance that they will reverse their decision.  If the chances of approval are a coin flip the market should be trading closer to $1.10 per share or perhaps will move toward that target the closer it gets to mid-December.

The primary issue the last FDA review group from OTAT had was regarding the size of the control group of AMPE’s AP-003-C.  To fix that the FDA suggest that AMPE do a Special Protocol Assessment.  The only issue is that this really doesn’t fix anything because any statistician know that if the other 6 trials had control data that was stratified and randomized it can be aggregated as a comparison for the AP-003C trial.  In simple terms any math teacher in American can tell that the FDA review board simply didn’t read their data and that is what caused them to issue an errant statements that the company was forced to appeal.  This simple mathematical fact that the FDA will learn NOTHING new from another SPA is reason enough to bet on the stock.

• Passed 6 Clinical Trials
• No Side Effects
• Filtered from Human Serum Albinum (HSA) which is FDA approved
• OARSI Response Rate 71%

The political pressure to get a non-opioid drug to market is very high and Ampion seem to be an ideal candidate that could curb the opioid abuse in America by stopping new Osteoarthritis patient from becoming addicted.  There is little doubt that Ampion is an approvable drug and with so much political pressure to stop the epidemic it’s a forgone conclusion.  Long term investors are extremely de-risked at this point.  In mid-December the stock is poised to soar.  If they have to do another SPA because of the statisticians that could mean another 6-9 months of waiting with the same result of approval.  The issue is not IF the drug will be approved but when.  Given the extreme discount to the anticipated BLA filing approval this represents an extraordinary risk to reward investment.

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