Ampio Pharmaceuticals Is Waking Up From Its COVID-19 Slumber, Approaching Potential Approval For Severe OAK (NYSEMKT:AMPE)

Ampio Pharmaceuticals Inc. (AMPE) has had a long road to FDA approval for its osteoarthritis drug called Ampion. It’s been 9 years and 5 clinical trials in the making, and they are in their final push for approval. There is clear evidence suggestive of approval for Ampion in osteoarthritis of the knee (OAK) due to the positive results in almost all their clinical trials. After completion of an ongoing final trial, Ampion may finally be able to cross the finish line to tap the large OAK market. In mid-March, the COVID-19 pandemic created a suspension of patient enrollment just 15 patients shy of their 1034 mark. In addition, patients need to be followed for 12 weeks and the pandemic made this nearly impossible. This news shattered investors’ hope of approval by the summer, but out of the ashes came hope in repurposing Ampion as a COVID-19 therapy.

Last week Ampio successfully completed its phase 1 clinical trial in COVID-19 with extremely positive results. Although there is clearly an indication of clinical efficacy in COVID-19, the bigger market and faster pathway to Ampion’s FDA approval is via the company’s OAK Special Protocol Assessment (SPA) which could resume in Q4. However, it’s possible that positive results in their upcoming phase 2 COVID-19 trial could lead to an Emergency Use Authorization (EUA) squarely positioning Ampion as a platform technology targeting inflammation in COVID-19, Influenza, Chronic Obstructive Pulmonary Disease (COPD), multiple sclerosis, Crohn’s disease, and other inflammatory indications, all of which are potential developmental indications for Ampion after OAK. With an encouraging COVID-19 readout, Ampio no longer a one-trick pony, and after approval, it could potentially attract big pharma companies like Gilead Sciences (GILD) which recently completed its purchase of a platform technology of antibody-drug conjugates, developed by Immunomedics (IMMU), for$21 billion. Immunomedics recently received approval for Trodelvy use in triple-negative breast cancer (TNBC). Notably, Pfizer (PFE) and Eli Lilly Inc. (LLY) are developing a drug for OAK, but only to target pain.

From: Ampio 2020 Management Presentation

A Brief History of Ampio

Ampio is a small-cap biotechnology company primarily aiming to treat OAK with its biologic drug, Ampion. The company has run various phase 3 trials over the past few years, attempting to fine-tune which OAK patients benefit from Ampion the most and how to measure that benefit to submit that data in a biologics license application (BLA) to the FDA for marketing approval. All of this has culminated in a current pivotal phase 3 designed under an SPA. Thus, if Ampio can prove benefit with this trial which the FDA agreed could support marketing approval, they could finally market Ampion.

Treatments for OAK, including hyaluronic acid (HA) injections, corticosteroid injections, pain medications, total knee replacements (TKRs), and other healthcare costs totaled $27 billion per year in the US alone in 2013. No marketed treatment exists which actually modifies the disease or its progression, which means that OAK patients eventually require a TKR, which can cost over $20,000. There are over 790,000 TKRs per year in the U.S. alone. With Ampio’s evidence of efficacy, multiple successful phase 3 clinical trials, and it being the only company to ever present substantial evidence of efficacy in severe OAK (KL-4) patients who have a knee in such bad condition that they are on the verge of requiring a TKR, investors might be wondering “why is Ampio’s current market cap below $150 million?” There are good reasons, some of which are past blunders, and some of which were almost bizarre situations, out of Ampio’s control. With past struggles behind Ampio, herein lies the opportunity for investors.

Ampio’s Past Struggles

Back in 2018, Ampio was finishing up its second required pivotal trial, which was supposed to be the last trial required for approval, and was therefore anticipating filing the BLA for approval. Ampio was under the Office of Blood Research and Review (OBRR) last trial, who gave them specific guidance to follow. The guidance was followed on that pivotal trial. Ampio developed a protocol and submitted it for approval (slowly and carefully as they knew the FDA was going through a transition). According to Ampio:

[the] FDA previously reviewed the AP-003-A (SPRING) study and confirmed it is the first of two required pivotal studies in support of a Biologics License Application (BLA) for Ampion™. FDA has now reviewed the AP-003-C (PIVOT) study and has agreed, ‘[t]he trial is adequate to serve as [Ampio’s second] pivotal trial in support of a future BLA’.”

However, by the time the trial was complete and data was submitted, the new division of the FDA they were under after the reorganization, Office of Tissues and Advanced Therapies (OTAT), did not honor the prior guidance or the industry guidance that the FDA had given for the industry, requiring Ampio to test Ampion in another phase 3 trial in KL-4 patients. Whether these problems will be attributed to mismanagement or blamed on the FDA (or both), that is water under the bridge. Ampio now has an SPA for their current trial. With evidence garnered from multiple large-scale studies, Ampio is on the right path forward now. These issues are behind them.

In addition to the unfortunate mixup at the FDA, Ampio was under pressure from “short-and-distort” campaigns, which attempted to further confuse investors into selling stock, to depress the stock price for short-selling profits. First, Ampio shares had substantial evidence of dark pool shorting. Second, a short seller’s article attempted to thoroughly confuse investors by manipulating data. For instance, the article displayed a clinical trial results chart that compares only 10mL saline (one of the placebo arms) to 4mL Ampion, as opposed to 4mL saline vs 4mL Ampion-this is an important distortion of data because saline actually has a relatively strong therapeutic effect, according to analysis of various studies. The misleading article also compared Ampion efficacy results to other clinical trials that did not have patients with the same baseline characteristics; Ampio enrolled a substantial number of KL-4 patients, which no other company has done. The article also compared short-term effects of steroids (which have a long-term detrimental effect of accelerating cartilage degeneration when compared with saline and no injections) with a regenerative therapy that has beneficial long-term effects at (at least) 16-20 weeks after the last injection [1]. The “short” and “distort” aspects of the attack on Ampio shares was quite clear.

From: Night Market Research

First, steroids are immunosuppressive, which will hamper actual healing and tissue growth. This is why steroids cannot help OAK long-term-they alleviate pain but suppress the immune system. For an example of how corticosteroids don’t have a lasting therapeutic effect after 12 weeks, one can look at Flexion’s (FLXN) extended-release corticosteroid Zilretta (a repackaged version of an already existing steroid triamcinolone acetonide or TCA), which obviously does not provide benefit at week 16 post-injection:

From: Zilretta Clinical Trial

Also, pain trials are known to have a high placebo response because people are paid, they expect a response, and outcomes are subject to patient surveys. Also, patients who are in higher amounts of pain tend to self-medicate to deal with the intense pain, which can skew placebo responses. Additionally, saline likely has a therapeutic effect. Pain OAK trials, in aggregate, have shown that saline has a large anesthetic effect of about 30% pain reduction, as well as improvement in stiffness and function, all of which play into improved WOMAC scores (functionality, stiffness, and pain scoring metric). Importantly, there are documented biological mechanisms by which saline works to reduce pain and inflammation. Thus, saline is referred to not as “placebo,” but as “vehicle control.”

The last key reason it is misleading to compare Ampion’s 12-week clinical trial results to other treatments such as corticosteroids or hyaluronic acid is because it is a disease-modifying osteoarthritis drug-it treats the disease and not the symptoms.

Overview of Ampion

Ampion is a low molecular weight fraction of human serum albumin (HSA) that has been shown to work in multiple ways. It’s basically a form of naturally occurring anti-inflammatory ingredients circulating in our blood plasma. The company discovered Ampion when they found that low molecular weight fractions of albumin had anti-inflammatory properties, but the higher weight fractions did not. According to the company’s research, Ampion

  • reduces inflammatory cytokines, including TNF-a, responsible for pain, tissue damage, and inflammation in OAK, and other inflammatory conditions including COVID-19
  • decreases vascular permeability (an upstream event in inflammation)
  • mobilizes and differentiates bone marrow-derived mesenchymal stem cells into normal chondrocytes
  • protects cells from apoptosis (programmed cell death) and autophagia
  • up-regulates both COX-2 mRNA and COX-2 protein in human immune cells and in synovial fibroblasts, human normal and osteoarthritic chondrocytes, leading to increased production of the anti-inflammatory prostaglandins PGD2 and its metabolite 15-d-PGJ2(which although COX-2 upregulation is an opposite mechanism of ibuprofen, COX-2 mediates prostaglandin production that is also beneficial to tissue healing). This is done while still reducing TNF-a
  • shifts the differentiation of inflammatory macrophages (M1) to the anti-inflammatory macrophage (M2) phenotype
  • decreases OAK inflammatory damage, and helps restore healthy chondrocytes and normal cartilage accretion

From: Ampio 2020 Management Presentation

The culmination of all these mechanisms is a drug that improves inflammation, but also likely regrows cartilage, making it a disease-modifying osteoarthritis drug, not simply a drug that improves symptoms and pain. Results from an Ampion open-label study (of three Ampion shots at two-week intervals and measured 52 weeks later) showed that:

repeated injections of Ampion are safe and well tolerated, and patients can expect a consistent, beneficial effect with repeat injections. Importantly, there was an improvement in joint space thickness of 12% in the medial compartment for subjects with medial disease, and an improvement of 6% in the lateral compartment for subjects with lateral disease.”

These results were consistent across various sections of the knee, also. Thus, Ampio has a drug that can regenerate cartilage and improve pain, and the benchmark it continues to beat is essentially a non-inferiority endpoint with respect to a drug, since it is fairly clear that saline has a therapeutic effect. However, what is also important in conjunction with joint regrowth is improvement in clinical outcomes such as pain and function. Ampio has completed many trials, consistently proving its value as an OAK therapy.

From: Ampio 2020 Management Presentation

When these results are compared to placebo, it is clear that the magnitude of responses in pain and function outperform the saline control group:

From: Ampio 2020 Management Presentation

As such, Ampio is enrolling patients in its pivotal trial, designed to be larger than prior phase 3 trials such that the statistical significance is undebatable. Ampio has aggregated data from its trials and it is clear that results are consistent. It should be just a matter of waiting for the final phase 3 to complete and read out with statistical significance.

From: Ampio 2020 Management Presentation

Unfortunately, COVID-19 delayed the latest OAK trial. So for now, Ampio will have to figure out how to move forward based on FDA guidance for trials impacted by COVID-19. There are 3 logical options. The first and most unlikely is that they will need to redo the entire trial. The middle of the road option that the company is likely preparing for is that they would eliminate some of the trial sites impacted by COVID-19. The final option and best for investors and patients is that the FDA tells them to file the BLA (since the trial was almost completely enrolled) and conduct a phase 4 study.

It needs to be clarified why all this renegotiating with the FDA is happening to begin with. COVID-19 is associated with muscle aches and it’s nearly impossible to identify if an ache was from OAK or COVID-19. Since so much of the study relies on pain assessment there’s a high likelihood that a number of these patients could have contaminated the data set if the investigator did not screen for it. In general, companies conducting clinical trials cannot cherry-pick patients in the trial. It’s likely that the FDA will allow them to drop trial sites that may have been impacted and restart in other sites to get an acceptable number of patients. This is a reasonable approach. The key thing to look out for in the FDA’s response is the number of patients needed to complete the trial.


Ampio has about 100 issued patents, with 40-50 pending. In addition, the FDA grants 12 years of exclusivity for biologics. With a strong patent portfolio and exclusivity for biologics, it will likely be difficult for any other pharma company to work around their intellectual property.

Manufacturing In-House and Easy Scale-up With Low COGS

From: Ampio 2020 Management Presentation

Ampio has a commercialization advantage going for them; their modular design requires lower maintenance, costs much less than traditional biologics, and is easily scalable or transferable. Each bottle of human serum albumin can make 83 vials of Ampion, for a total material cost of less than $200.

From: Ampio 2020 Management Presentation


A few years ago, the main competition Ampio was facing was existing HA injections, corticosteroids, and pain meds (COX-2 inhibitors), as well as pain and inflammation medications in development. They showed a strong argument in their PowerPoint, shown below, against these different classes of therapeutics, shown in their presentation slide below. However, in recent days, Ampio’s competition is more sophisticated.

From: Old Ampio Corporate Presentation

Ampio has some potential competition, although it is unclear if any of the competitors are testing their products on KL-4 OAK patients. First, MiMedx (OTCPK:MDXG) is testing its AmnioFix Injectable (micronized dehydrated human amnion chorion membrane injection) in a phase 2 trial for OAK. MiMedx’s AmnioFix Injectable has been granted Regenerative Medicine Advanced Therapy (RMAT) designation from the FDA, and a retrospective study of AmnioFix Injectable for OAK (when the product was sold under a different set of rules) showed that AmnioFix improved pain by 67% and improved function by over 100% at 6 months. It is difficult to compare Ampion to AmnioFix Injectable since Ampio didn’t use the same scoring criteria as MiMedx (used KOOS, for more active populations), and Ampio doesn’t really have a lot of 6-month data for an aggregate of OAK patients ranging from mild to severe. Ampio has 60-week data on KL-4 patients showing a 47% reduction in pain (injection every 12 weeks), but these patients likely aren’t exactly comparable to the MiMedx’s retrospective study. What is comparable is safety, and Ampio matches or beats any OAK study on safety.

Merck (MRK) could be considered a competitor for Ampio, too. Merck has a recombinant human FGF18 drug that essentially stimulates chondrocytes to proliferate and then make collagen and regrow the knee cartilage. The phase 2 2-year readout showed an increase in cartilage thickness, which was very encouraging, and the increases in cartilage thickness compared with placebo continued years after follow-up. However, as previous studies have indicated, the origin of OAK pain occurs in the tendons attempting to stabilize an unstable (degrading) joint. Restoration of stability and functionality can only be achieved through alleviation of inflammation involving the reduction of swelling and edema and the strengthening of the knee stabilizers. So, while cartilage regrowth is important, it has unclear clinical significance. Along these lines, sprifermin did not achieve a statistically significant or clear clinical benefit on WOMAC outcome, as did Ampion. According to the study’s lead investigator:

While the increase in cartilage thickness is a positive sign, we do not know at this point whether it has any clinical significance,” Hochberg said in a press release. “It is not known whether those who experience increased cartilage thickness over time will be able to avoid or delay knee replacement surgery.”

Ampio, on the other hand, has data to back up its clinical significance-WOMAC improvements in function and pain, as well as avoiding or delaying knee replacement surgery. In fact, a study follow-up Ampio ran a few years ago showed a greater than 50% reduction in TKR rates in severe OAK patients at a three years follow-up. The patients that were shown to be responders to Ampion were in-line with the ones who avoided TKR. While these results are encouraging, the patients were only dosed at the beginning and did not receive continual dosing throughout the three years. The real question is, if patients were administered Ampion at regular intervals, for instance every 3 months or 6 months (like Merck did) for the three years, would most of them not only improve in symptoms, but avoid TKR indefinitely?

After all, Ampion seems to be able to produce long-term benefits as evidenced by the continuing reduction in pain after 5 injections within a year:

From: Ampio 2020 Management Presentation

Samumed, LLC (private) recently launched a phase 3 clinical trial, STRIDES, for lorecivivint treatment of KL-2 and KL-3 OAK. Lorecivivint is the company’s small molecule modulator of the Wnt pathway (through CLK2 and DYRK1A inhibition). Lorecivivint modulation of the Wnt pathway affects stem cell/chondrocyte differentiation and function. In phase 2 studies intra-articular injection of lorecivivint improved both pain and physical function, as well as medial joint space width. Thus, the drug offers promise of improving symptoms and modifying the disease fundamentally.

Even more interestingly, Emory University is running a phase 3 study with autologous bone marrow concentrate with stromal vascular fraction (adipose-derived) and allogeneic mesenchymal stem cells from umbilical cord tissue. Anecdotal responses have been encouraging; however, it is difficult to find any placebo-controlled or blinded study data suggesting efficacy with this data. This study is enrolling KL-2 through KL-4 patients. However, autologous stem cell processes are substantially less convenient than Ampion or other simple shots.

Ampio also faces competition from Flexion and other companies that market corticosteroids. For instance, Taiwan Liposome Company (TLC) is testing TKC599, an extended release dexamethasone (corticosteroid), for KL-2 or KL-3 pain relief. The company was able to show significant reduction in pain through 24 weeks. However, since this is not a disease-modifying OA drug, like Flexion’s drug. Corticosteroids have been shown to accelerate degeneration. So, perhaps Ampio’s true competition includes Merck, MiMedx, Samumed, and unregulated stem cell clinics.


Since other competitors mentioned do not have compelling data on, or do not seem to be targeting KL-4 OAK patients, one can model Ampion sales based on TKR rates, assuming some of those TKRs are delayed (per data showing TKR prevention/delay) and patients who do not receive TKR further delay time-to TKR.


  • Price: $1000/injection,
  • 3 injections per year
  • COGS of $30 per year –
  • Relatively low royalty rate instead of modeling SG&A, marketing, etc
  • 790,000 patients needing TKR/year for initial population, increasing by 790,000 every year plus the patients that Ampion prevents from progressing to TKR
  • 200 million shares fully diluted (added buffer of 5 million shares)
  • 20% discount rate
  • 50% KL-4 peak market penetration
  • 14% patients on Ampion progress to TKR every year
  • 12-year exclusivity with 0 terminal value
  • 10% royalty
  • Sales commence 2022 US KL-4 osteoarthritis on the knee only, no other geographical areas or indications

Thus, Ampio shares could be worth approximately $29/share if these assumptions are true and if Ampio management executes. Ampio appears undervalued.

Financial Analysis

The company has a current market capitalization of $130 million based on 173 million shares outstanding at the end of June. The additional paid in capital is close to $200 million which effectively represents the amount of money it has taken to develop the platform technology and get it to the point where it is one step away from commercialization. The burn rate is running at about $2.6 mill per quarter, but they were eligible for the paycheck protection program and it offset their costs by $544K in the past quarter. They have about $4.8 million in cash which represents enough money until the end of the year given their current burn rate. The completion of the AP-013 trial isn’t expected to wrap up until Q1 2021. As aforementioned, Ampio expects to restart this trial in the next couple of weeks.

The company may need to do a small capital raise in the order of magnitude of $5.0 million which would represent a current dilution of 3.8%. To put this into perspective the average trading volume over the past 3 months is 3,783,736 which is about equivalent to 2 trading days. Offsetting this need to raise capital are 6,866,000 warrants at a strike price of $.57. Should the stock continue its march higher, this represents an additional $3.9 million of non-dilutive financing through warrant exercise. The company has also engaged the highly regarded Torreya Partners LLC to advise them on M&A and licensing transactions. A licensing deal could be a very positive change for the company and end the cycle of dilution as the company awaits commercialization.


Ampio’s management has made critical errors in the past, but now the company is finally running a robust placebo-controlled trial under an SPA. The FDA could also require Ampio to run another study, yet again, but Ampio’s recent guidance suggested the FDA was going to review their proposal for AP-013 to get restarted early in the fourth quarter which is coming up in the next couple of weeks. Investors should realize, in general, the Special Protocol Assessment trials are a pre-negotiated approval of the drug if the drug meets the endpoints. It’s a hard cutoff on the statistics that leaves no room for FDA interpretation. Investors like this because it reduces risk of a trial by neutralizing or decreasing the potential fickleness of the FDA to hand out an approval.

A more notable risk is that competing products may prove to outperform Ampion in OAK, and if those products are developed for KL-4 patients eventually, competition could take market share from Ampio. However, this is a longer-term risk. As the market stands now, there are no clinical trials in phase 2 or 3 exclusively focused on the KL-4 patient. On the other hand, there are about a dozen trials in phase 3 actively recruiting for KL-2 and KL-3 OAK patients.

Like most pre-revenue biotechnology companies, Ampio will require cash in the future and this could result in significant dilution to shareholders as discussed in the financial analysis. Ampio could also fail its clinical trial, but their SPA is a non-inferiority trial which means as long as they are not worse than the standard treatment they can get approval. Passing this trial should theoretically be no more difficult than a stroll in a park because Ampio has already completed this study before with statistical relevance. Their pivotal AP-003-C trial actually crushed the endpoint with 71% of Ampion patients meeting the OMERACT-OARSI responder criteria. The threshold was 30% so this was the first trial in OAK to demonstrate efficacy in pain, stiffness, and function over a historical saline control. However, at the end of the day, the ongoing trial is still another risk.

Lastly, safety is one of the biggest hurdles to get through in the approval process, and is the top reason drugs are not approved or are discontinued in development. There have not been any SAE’s associated with Ampion over the history of its 5 clinical trials. The drug has an exemplary safety profile, further reducing the risk of approval.

The biggest risk for Ampio investors is Ampio’s own management and management of financings, in my opinion.

Future Directions

Due to the evidence that Ampion can attract and differentiate mesenchymal stem cells into chondrocytes, it is a distinct possibility that Ampio’s future R&D could include mixing mesenchymal stem cells with Ampion as a knee injection, which could improve the regenerative capacity of the product, providing more stem cells directly to the knee to differentiate into chondrocytes and grow into cartilage tissue. This would also set Ampio apart from and potentially a notch above stem cell-based OAK competition.


Ampio seems to have a best-in-class, differentiated, and potentially disease-modifying osteoarthritis drug for OAK, notably severe OAK, and with a final phase 3 potentially reading out soon. With no other company seemingly targeting KL-4 patients, there is a huge unmet need worldwide for products like Ampion, and without taking into consideration potential efficacy in other joints, which is very likely if Ampion is approved for OAK, Ampio has a large global opportunity ahead of itself.

The company is significantly undervalued given it is so close to completing its final trial; there seems to be a lot of investor fatigue. Whether the fatigue is coming from short sellers, financings, or frustration with the FDA, it is creating what could be a lucrative opportunity. After all, biotech investors should understand that the definition of statistically significant data means, practically, that if Ampio repeats the same trial, the results are expected to be the same. AP-013, the current trial, is no different in its endpoints than its predecessors, AP-003-A and AP-003-C, which were statistically significant and crushed their endpoints. Any investor that believes in statistics will not be surprised when the trial is finished early next year and meets its endpoints. Furthermore, if the stock market is supposed to be forward-looking, such as 6 months in the future, Ampio’s stock has got some catching up to do. Given Ampion is now showing signs of potential efficacy in COVID-19 and has the potential to be used in other indications, sooner than later a catalyst might finally wake up investors from their deep slumber.

Disclosure: I am/we are long AMPE, MDXG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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