Why Ampio Pharmaceuticals, Inc. Shares Jumped

Why Ampio Pharmaceuticals, Inc. Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Ampio Pharmaceuticals, Inc. , a biopharmaceutical company focused on developing therapies to treat metabolic, eye, kidney, and chronic inflammation diseases, jumped as much as 13% after announcing a $25 million in fresh financing.

So what: According to Ampio's press release, it will be selling 4.6 million shares to a limited number of investors (mostly institutional investors), who will be able to purchase Ampio at a substantial discount of $5.50 per share. The gross proceeds will be $25 million, which, after taxes, will practically double the company's existing cash balance of $12.5 million. The offering should be completed by the end of the month.

Now what: Normally, share offerings are bad news, but investors seem to be excited about the fresh cash for two reasons. One, the new shares, though discounted, are being gobbled up by institutional investors, which would be a sign that Wall Street sees promise in Ampio's pipeline. Second, it provides much-needed cash for a company still in the clinical stage of its development. In other words, a secondary offering of some form was expected, and this is pretty much the best outcome. I've felt for a while that Ampio could represent an intriguing investment opportunity and would certainly encourage biotech-savvy investors to add it to their Watchlist.

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The article Why Ampio Pharmaceuticals, Inc. Shares Jumped originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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