Ampio Pharmaceuticals Inc. priced an underwritten public offering of 8.5 million shares of common stock at $7 apiece, seeking to raise $59.5 million. The offering price represented a discount of 11.8 percent to Ampio’s (NYSE MKT:AMPE) closing price of $7.94 on Thursday, but the offering was upsized from the 8 million shares cited in the company’s preliminary prospectus supplement, dated Feb. 24.

Predictably, the company’s shares opened lower Friday morning, though they spiked as high as $8.18 during the day before closing at $7.12 for a loss of 82 cents. Volume was more than 20 times the daily average.

In its prospectus, Ampio reported 42.1 million shares outstanding as of Feb. 21, which would boost the company’s market cap to approximately $354.5 million when the financing closes, based on the offering price. Ampio granted the underwriters a 30-day option to purchase up to 1.275 million additional shares, potentially adding $8.925 million to the offering, which is expected to close by March 5, subject to customary conditions. Citigroup Global Markets Inc. and Jefferies LLC are acting as joint book-running managers.

The Greenwood Village, Colo.-based company said proceeds will be used to move lead compound Ampion to a biologics license application (BLA) filing and a second compound, Optina, to a new drug application through the 505(b)(2) pathway. The company also will use some funds to gear up for commercial production. At present, both programs are unpartnered.

Ampio is completing clinical trials for Ampion to treat osteoarthritis of the knee (OAK) with a single intra-articular injection. In August 2013, the company reported findings from its first phase III SPRING study showing that Ampion achieved clinically meaningful reduction in OAK pain.

The double-blind, vehicle-controlled SPRING study randomized (1:1:1:1) 329 OAK patients to 4 mL or 10 mL of Ampion or corresponding saline control doses by intra-articular injection. The study was designed to evaluate the relative efficacy of the two Ampion dosages, with a primary endpoint of mean change in pain from baseline for Ampion compared to the same volume of saline. Secondary endpoints included evaluations of safety and quality of life as well as stiffness and function. (See BioWorld Today, Aug. 15, 2013.)

Ampion, or aspartyl-alanyl diketopiperazine (DA-DKP), is an endogenous immunomodulatory molecule derived from the N-terminus of human serum albumin that appears to reduce inflammation by suppressing pro-inflammatory cytokine production in T cells.

At the time, Michael Macaluso, Ampio’s chairman and CEO, told BioWorld Today the company “didn’t stack the deck” by excluding patients with certain physical characteristics, comorbidities or even personalities.

“We took all comers,” including patients with bone-on-bone OAK who were in severe pain and those with more moderate pain, he added. “What was so impressive to the doctors was that they had something for everyone.”

Ampio officials did not respond to interview requests about the public offering.

The company has completed enrollment and dosing in a second phase III study, the STEP trial, in which 500 patients with OAK pain are being randomized to Ampion or placebo and followed for 20 weeks. According to Thomson Reuters Cortellis Clinical Trials Intelligence (CTI), the primary endpoint is improvement on the Western Ontario and McMaster Universities, or WOMAC, osteoarthritis pain subscore. The trial also is measuring the Patient’s Global Assessment of disease severity and assessing safety by recording adverse events, concomitant medications, physical examination, vital signs and clinical laboratory test results. Top-line results are expected in the third quarter.

In its prospectus, Ampio said the FDA – in response to the company’s investigational new drug application and submissions describing two concurrent phase III protocols – agreed that findings from two sequential, well-conducted trials could support a BLA. The SPRING study enrolled 320 patients. Overall, more than 1,000 patients have been treated with Ampion, according to Cortellis CTI.

Beyond OAK, Ampio is evaluating the potential use of Ampion to treat acute and chronic inflammatory conditions, degenerative bone diseases and respiratory and allergic disorders. In its prospectus, the company said the current Ampion patent portfolio consists of 44 issued patents and 42 pending applications worldwide across three patent families, potentially providing patent protection in certain indications until 2032.

SECOND COMPOUND GIVES AMPIO A SHOT AT DME

The company also is evaluating Optina, an orally administered ultra-low dose of danazol, to treat diabetic macular edema (DME). At low doses, danazol – a derivative of the FDA-approved synthetic steroid ethisterone – decreases vascular permeability by increasing the barrier function of endothelial cells.

In 2012, Ampio halted a randomized, double-masked, placebo-controlled, dose-ranging phase II study evaluating the efficacy and safety of Optina in 34 patients with moderate to severe DME, based on a planned interim analysis. The primary endpoint was mean central retinal thickness (CRT) measured by optical coherence tomography. Secondary endpoints included improvement in best corrected visual acuity and safety. Although no significant safety issues were identified, on a pooled basis, Optina failed to demonstrate significant reduction in CRT vs. placebo.

The company determined the overall study design was complicated by the lipophilic nature of danazol, requiring that dosing take body mass index (BMI) into account. The company initiated a redesigned study evaluating the safety and efficacy of danazol dosing based on BMI, and results showed a strong correlation between BMI and efficacy at different doses.

In February 2013, the company initiated a phase IIb trial enrolling 450 patients. The U.S. multicenter, dose-ranging trial is evaluating the safety and efficacy of oral Optina compared with placebo over 12 weeks in adults with DME, with patients randomized 1:1:1 to receive Optina at 0.5 mg per BMI or 1 mg per BMI per day, or placebo.

The primary endpoint is improvement in best-corrected visual acuity in treated patients compared to placebo. Secondary endpoints include measurements of changes in central macular thickness in treated patients compared to a placebo and safety and tolerability of the two Optina doses.

Ampio expects to complete enrollment in the first quarter and to report top-line results in the third quarter. In October 2013, an independent data review committee recommended continuing the study after an unmasked interim analysis found a treatment dosage demonstrated potential benefit, with no observed safety signals.

Repositioning the drug gives Ampio strong patent protection for Optina, since danazol has no approved indications below a 100-mg dosage. (See BioWorld Today, March 20, 2012.)

The company reported cash and equivalents of $26.3 million and an accumulated deficit of $63.8 million as of Dec. 31, 2013. Ampio previously raised $15.4 million In July 2012 in an underwritten public offering and $25 million in September 2013 in a registered direct offering. In its prospectus, the company said the current offering would extend its cash runway for approximately 12 months.