This Colorado Pharma May Not Have Enough Cash to Last 2017
March 24, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Ampio Pharmaceuticals , based in Englewood, Colo., is running out of money.
Ampio focuses on inflammatory conditions, such as osteoarthritis, and diabetic macular edema. Its lead compounds are Ampion, for osteoarthritis of the knee, and Optina, for diabetic macular edema. Ampion’s primary ingredient is aspartyl-alanyl diketopiperazine (DA-DKP), an immunomodulator. Optina is a novel, ultra-low dose of danazol.
On February 27, the company announced that after discussions with the U.S. Food and Drug Administration (FDA)’s Office of Tissue and Advanced Therapies (OTAT), the company proposed a small pre-approval study for Ampion in patients with severe OAK.
However, the recent 10-K filing with the U.S. Securities and Exchange Commission (SEC) seems to bring into question whether the company has enough cash to continue moving forward.
The 10-K filing stated, “a ‘going concern’ opinion could impair our ability to finance our operations through the sale of debt or equity securities or through bank financing. We have raised over $100 million in equity financing in the past and believe that we will be able to raise additional equity or debt financing in the future but the financing could be extremely dilutive to our current shareholders. Our ability to continue as a going concern will depend on our ability to obtain the additional financing. Additional capital may not be available on reasonable terms, or at all.”
A “going concern opinion” is a specific type of audit opinion made by auditors, which has required explanatory language. The Financial Times lexicon notes that, “Auditors should issue a ‘going concern opinion’ when the entity’s financial condition is such that there is doubt as to the firm’s ability to continue as a going concern.”
As of March 1, Ampio had 21 full-time staffers. The 10-K also stated, “We have experienced significant net losses since inception. As of December 31, 2016, we had an accumulated deficit of $153.1 million. We expect our annual net losses could continue over the next several years as we advance our development programs and incur significant clinical development costs.”
The company’s cash runway, as of December 31, 2016, was $4.9 million. The company projects that will only fund operations through May or June of this year. It needs, it stated, to raise at least $12 million through equity offerings, debt or other financing tools to push through 2017 and into 2018.
Although that seems grim, Michael Macaluso, company chairman and chief executive officer, said in a statement, “I addressed the ‘going’ concern issue with our large shareholders way in advance of the audit. I asked them if they were in my position, would they accept at the ‘label’ or be more willing to accept another 20,000,000 shares of dilution at a time when we are so close to a major event. Their responses were unanimous, take the ‘going’ concern. I agree, but the decision comes with some fall-out. I can assure you we are not going out of business.”
In the case of Ampio, it does appear that there’s a race between time and money. The FDA acknowledged that there is an unmet medical need for patients with pain due to severe osteoarthritis of the knee, and there are currently no FDA-approved conditions for the category graded as Kellgren-Lawrence Grade 4 (KL4). The company expects a possible commercial launch of Ampion in 2018—if it can stay in business long enough. The company has been working on broadening its international property protections, such as in China, in preparation for a global launch.
Company is currently trading for $0.82.