+ Watch AMPE
on My Watchlist
Watch for the buyout. Two businesses that have significant buyers waiting.
innovative science, strong patents, potential huge market for ampion perhaps in other uses.
Huge pipeline coming with possible 2 or 3 FDA approvals
Recent Phase 3 trial for hemodialysis patients met both primary & secondary endpoints. Investors misun-derstood the trial results and "drop-out" rate. A second identical parallel trial (Cruise-2) will confirm Cruise-1 and an NDE should be filed in 4th qtr 2013.NTMI is currently significantly undervalued at today's price.
I like AMPE for the following reasons:1. Benefit from lack of venture capital:a. Unlike most biotechs and small pharma companies, AMPE has reached an advanced development stage without having taken ANY venture capital. To do so is extremely difficult is a tribute to management’s austerity and perseverance.b. The above has enabled AMPE has taken a quiet and conservative approach in developing its science and drug candidates over a 20-year period before becoming public.c. The lack of venture backing has enabled the company to advance without the pressure of a five to seven year venture investor window which could have forced pre-mature entry into the capital markets, merger, sale and the like.d. The time gained has enabled the company to advance much further many companies of its ilk without vast amounts of dilution, and to exist currently without large amounts of pressure from potential selling venture shareholders.2. Focus on IP developmenta. AMPE has amassed 190 patents and patent applications covering a vast array of significant medical conditions.b. Their IP is developed in house, and not a cast-off from other companies, or academically developed technology, which has been read by others who have taken a “pass.”c. Their IP is good science that is well protected3. Advanced level of developmenta. Because of their approach, their time and cost to market is significantly reduced.b. Their ability to maintain a remarkably low burn rate has provided them with the longevity and cash to bring drug candidates and other products to later stage of development before seeking partnerships, co-development agreements, and the like, that would have significant dilution in profit potential.4. Their productsa. Close examination of their patent filings reveal that their current drug candidates merely scratches the surface of the potential applications of their science.b. Zertanei. Zertane is a sweet deal. Rapid clinical advancement through the “re-purposing” strategy into an enormous market. ii. The premature ejaculation market is estimated to be up to four times the size of the erectile dysfunction market – and that does not include the potential “recreational” market for Zertane, use by those without a “clinical” diagnosis of PE, but who want “last longer.”iii. Although PE is not classified (yet) as a medical condition by the FDA as it is in other countries, I expect that will change. Nothing like capturing a market in the US before it even starts.iv. The patents for a combination drug in treatment of ED and PE, has remarkable potential, particularly as ED drug patents begin to expire and companies seek the next generation of Viagra and/Cialis and ways to extend the patent life of those drugs.v. Zertane has already begun attracting partnership interest – and real cash. In addition to up front and milestone payments from a very reputable South Korean firm, funding for clinical trials of the combination drug and 25% royalty is astounding. And I think it only the beginning.c. Ampioni. In my view Ampion will ultimately be the biggest of the drugs in AMPE’s pipeline.ii. Introduction of the science behind Ampion through Ampion-in-Knee (AIK) can be viewed as low hanging fruit, compared to the enormous potential of an effective and safe anti-inflammatory in multiple other, more life threatening and critical disease states (see their patent filings).iii. Approval of AIK will open the door for rapid advancement of Ampion into other indications – consider it being a “self re-purposed” drugiv. Ampion is not a “re-purposed” drug, but a derivative of a natural occurring protein in the body discovered by AMPE to have a potent effect on inflammation.d. Other products – business sense marries sciencei. Stepping back and looking at the overall science and strategy of AMPE, a picture becomes clear. This is a company focused on the bottom line, not the beauty of its science. Its science is beautiful, but it does not tout its science, it commercializes it.ii. AMPE seems to be able to discover and re-purpose drugs through a more intelligent approach and clearly has understandings of the mechanism of action of its compounds, and thus can identify the many other potential markets for them.5. Capital structurea. As stated above, the lack of venture capitalb. Per the company, prior to the deal with Daewoong (South Korea) AMPE had funds sufficient until Q4 2012. Daewoong provided yet additional up-front cash in the “mulit-millions.” Based on what appears to be a very low burn rate, AMPE may not need, or may need only little in the way of a diluting capital raise in the near future. Other Daewoong-like deals will further enhance this positionc. There is a small float currently, and even on a fully diluted basis, there are not many shares outstanding. Companies with the kind of pipeline and in their stage of development can readily command market caps in excess of $500M. That’s a double from today’s ~ $9.6. Recent management additions – a. Why would someone who is Director of Strategy and Analytics for Pfizer's Primary Care product portfolio and who spent seven years analyzing pharmaceutical companies, the value of their drugs and drug pipelines for JPMorgan and Piper Jaffray, suddenly jump to a small unknown company like AMPE? Could it be that there is a “there” there?7. NEGATIVESa. There is an overhang of shareholders from the acquisition of DMI whose shares become tradable on 1/1/12 upon the expiration of a lock-up agreement. These may have a dilutive effect on the stock. In mitigation, however, they do not trade as a block and consist of a large number of individual shareholders, not all of which may actually desire to sell, much less at the same time.b. Lack of market makers and major analyst coverage. This may not be totally unexpected as AMPE went public through a reverse merger followed by PIPE that was subsequently registered with no major Wall Street investment bank being involved (a miracle in its own right in this market!). However, the company will need to have that kind of coverage and the attention of one or more of the major Wall Street firms in order for the shares to go the next level.
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