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Here's Why Ampio Pharmaceuticals Stock Is Surging Today

By Cory Renauer – Aug 5, 2021 at 1:24PM

Key Points

  • Ampio's cash burn rate appears slow enough to take the company into late 2022 before running out.

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A positive second-quarter earnings report and anticipation of further details to be discussed this afternoon helped this beaten-down biotech stock recover some previous losses.

What happened

Shares of Ampio Pharmaceuticals (AMPE) are on the rise after the company released a positive second-quarter earnings report this morning. News of progress with the company's experimental COVID-19 treatment, Ampion, pushed the stock 17.5% higher as of 1:06 p.m. on Thursday.

So what 

This clinical-stage drugmaker didn't have any product revenue to report, but progress with an experimental COVID-19 treatment encouraged investors to drive the stock higher. After losing $3.6 million during the second quarter, Ampio Pharmaceuticals finished June with $20.5 million in cash on its balance sheet.

Investor looking at stock chart on a laptop computer.

Image source: Getty Images.

The company is still attempting to develop Ampion as an under-the-kneecap injection for osteoarthritis pain despite multiple clinical trial failures, and a stinging rejection from the FDA a few years ago. More recently, though, the company has turned its attention to developing Ampion as a COVID-19 treatment.

Now what

Ampio thinks its current cash cushion will be sufficient to keep operations humming along through the fourth quarter of 2022. The company intends to hold a conference call at 4:30 p.m. EDT Thursday to discuss progress with Ampion, its only new drug candidate. Investors expecting Ampion sales to provide a lift when this biotech runs out of cash, though, are probably setting themselves up for disappointment.

Ampion isn't an innovative new biologic drug; it's just albumin, the most abundant protein found circulating in the plasma of healthy people. If you've ever given blood, your albumin was most likely separated from your plasma and used as replacement therapy by patients who can't produce enough of their own. For everyone else, though, its utility is highly questionable.

Albumin does play a role in the inflammation process and it might be able to prevent overreactions that can be fatal for severely affected COVID-19 patients. Unfortunately for Ampio, this is a problem that the medical community already solved with dexamethasone, a corticosteroid treatment that's been available for decades.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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