Wall Street Shouldn't Write Off Ampio Pharmaceuticals, Inc. Yet: Citi Analysts
Published: Sep 16, 2014
September 16, 2014
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Wall Street is being too hasty in its decision to walk away from pharma firm Ampio Pharmaceuticals because the company's product performance is still strong and promises possible upside, an analyst from Citgroup said late Monday
Ampio's share price took a nosedive to a 52-week low of $4.95 on Friday, a day after the firm said its osteoarthritis drug Ampion had seen major setbacks in a clinical study.
Citigroup analysts Jonathan Eckard and Yaron Werber wrote in a note that they though the Street had forgotten the most important rule in biotech investment: "High risk means high reward." Citi has maintained its buy rating on the stock.
Ampio’s trial study, called the STEP trial, was hoped to be a way for the company to duplicate the results of a 2013 test of the drug that reducing pain in patients with osteoarthritis of the knee by more than 40 percent, in a patient pool of 329.
But Ampio had to scrap those results after discovering that the company it had hired to ship the drug had exposed multiple lots it to temperatures colder than 15 degrees Celsius--halting any chances of scientific conclusion of efficacy.
But Citi's analysts said the rush away from Ambio's stock as a result is a short-sighted overreaction
"As disappointing as the recent STEP trial mishaps were, we view the residual value left in AMPE assumes minimal value from the company's 2 Ph 3 programs, both with catalysts before YE," wrote Exkard and Werber.
Citi pointed to strong Ph 3 data for Optina before October and added that they think the Ampion multiple-injection pain and cartilage imaging data by year end "each have potential to dramatically change this forgotten story."
"The partially available STEP results point to less efficacy than the prior SPRING trial," they wrote in the analyst note. "However the FDA scoured the patient level data from the spring trial before endorsing it as pivotal, and with two additional sets of data before YE, we believe it is too early to write off."
The analysts said that there was still significant biologic rationale for Ampion and that the drug is worth continued watching by Wall Street.
"While high-risk, we maintain our belief of the scientific rationale is worth another look," wrote Werber and Eckard. "If even early data from the ongoing multiple injection trial point to strong signals of new cartilage formation, the value of this program would change dramatically in our view."