Three Potentially Explosive Small Cap Stocks For 2013

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Three small cap companies that are driven by very different forces are all well positioned to enjoy large percentage gains this year. The first company develops drugs for the orphan drug space where share prices are running circles around traditional pharma and biotech stocks. The second company develops repurposed drugs that have already been approved for safety by the FDA but are now being developed for different illnesses addressing very large markets. Repurposed drugs enjoy the potential to gain FDA approvals in record time, at historical low cost and with minimal risk. And third, large and increasing numbers of our middle-aged and aging population are greatly influenced by the media to look younger and almost all ages are searching for a way to lose fat fast and easy. Our society places high value on youthful and healthy appearance and many people are now more motivated than ever to find ways to look younger and to appear lean and vibrant. Companies that can provide these needs cost effectively and with minimally invasive procedures will be very profitable.

Catalyst Pharmaceutical Partners, Inc.

After disappointing results from their phase II trial of CPP-109 for cocaine addiction, Catalyst Pharmaceutical Partners, Inc. (NASDAQ: CPRX) successfully repositioned into the hot Orphan Drug space with orphan drugs Firdapse and CPP-115. Orphan drug stocks are the best performing drug stocks today because of the strong advantages they enjoy such as higher drug reimbursement prices and profit margins, faster approval times, cheaper and less risky trials, tax advantages and market exclusivity advantages. The advantages are so great that many big pharma companies are turning their focus to orphan drugs to help offset loss of sales from "patent cliff" issues and rising costs to develop new blockbuster drugs. The global Orphan Drugs market generated revenues of $84.9 billion in 2009 and is expected to reach $112.1 billion by 2014.

In October 2012, Catalyst in-licensed the North American rights to the orphan drug Firdapse from BioMarin (NASDAQ: BMRN).

Seeing an opportunity to profit from shares, BioMarin invested $5,000,000 in Catalyst Pharmaceutical Partners. Firdapse is approved in Europe for Lambert Eaton Myasthenic Syndrome, "LEMS", and has already sold over $14 million last year. This new orphan drug is in late-stage phase III pivotal trials in the United States for LEMS. Based on an estimated reimbursement ranging from $25,000 to $75,000 per patient, Firdapse is projected to exceed $100 million in U.S. sales and those numbers could climb even higher.

CPP-115 is Catalyst's blockbuster drug that has the potential to treat several different orphan indications as well as some larger market illnesses. This exciting new drug was designed by Dr. Richard Silverman who also created Pfizer's blockbusters Lyrica and Neurontin. CPP-115 is an analogue of vigabatrin that is approved and sold under the name Sabril currently used to treat Epilepsy and Infantile spasms. In spite of Sabril's sales being dampened by its' adverse side effect of potential permanent loss of peripheral vision, U.S. sales in 2012 were still $72 million, rising 22% from the previous year. CPP-115 is estimated to be 200 to 300 times more powerful than Sabril and has also demonstrated in animal studies that it does not have the same potential adverse side effect of peripheral vision loss.

CPP-115 is believed to have the potential to treat several orphan drug indications including Refractory Epilepsy, Epilepsy, Infantile Spasms, Tourette Syndrome, Post Traumatic Stress Disorder and several Movement Disorders. See "Catalyst Pharmaceutical's CPP-115 May Be Big Pipeline In Just One Little Pill".

Aegis Capital recently released a report on Catalyst with a projected $2.50 price target in the next 15 months. The report projects CPP-115 peak sales at 1.6 billion. Catalyst has enough cash for at least one year. Roth Capital increased its' target from $1.50 to $2.00.

Evidence that Catalyst shares are undervalued is further supported by management buying shares in the open market. Insider Monitor displays insider purchases on their web site.

Ampio Pharmaceuticals, Inc.

Ampio Pharmaceuticals, Inc. (NASDAQ: AMPE) is a relatively unknown company that is shattering all records by successfully developing blockbuster drugs in unbelievable record fast time, at record low cost and with record low risk. Ampio is currently engaged in 2 pivotal trials for two blockbusters, Optina and Ampion, with results of both expected before the end of this year.

Optina is repurposed Danazol that has been used for decades to treat endometriosis and is now in its' final FDA clinical trial to prove that it can successfully treat Diabetic Macular Edema, DME, with no adverse side effects. Optina's safety has already been proven as Danazol at higher doses of 800MG and will be dosed as Optina for DME at less than 5% of the Danazol approved dosage. It's extremely important to note that Optina is a pill rather than injections directly into the eyeball. If Optina is approved it may soon replace the eye injections Eylea by Regeneron (NASDAQ: REGN) and Lucentis by Roche and Novartis that are currently enjoying sales in excess of $3 billion annually. Based on a recent article, Regeneron shareholders are becoming aware of Optina and are wisely keeping a close eye on the current pivotal FDA trials.

Ampion appears to be a one of the most effective anti-inflammatory drugs developed to date and it also appears to be unlike every anti-inflammatory in existence in that it has shown no adverse side effects. Ampion is a biologic and because it is a naturally occurring substance in the body and because it has a proven safety record for over 40 years as Human Serum Albumen, Ampion is not expected to have any safety concerns. Prior trials have shown compelling efficacy for osteoarthritis knee replacement candidates and there is even an Australian Channel 9 News video testimonial about Ampion's almost miracle like drug performance with no adverse side effects. Ampion is currently in phase III trials and the results are expected to be known before the end of this year. If approved, Ampion has the potential to become a dominant drug in the $65 billion anti-inflammatory market.

Zertane is a repurposed drug, Tramadol, used now for the sexual dysfunction of Premature Ejaculation that is experienced by an estimated 25% of the male population. The safety of Zertane (Tramadol) has already been proven and approved by the FDA. The FDA has provided guidance for the upcoming Phase III Trial of Zertane that is expected to commence soon. Mike Macaluso, the CEO of Ampio, recently announced at a UBS presentation that the company expects to be making a major announcement "very soon" that a licensing deal to a big pharma partner has been struck. If this happens, company valuations and shares will explode and very likely exceed all time highs.

The company holds several patents on Zertane ED that is regular Zertane combined with PE5 inhibitors such as Viagra. Since Viagra comes off patent soon, it would seem to be of great interest to Pfizer to explore the licensing of Zertane ED to keep their patent holdings alive.

At the recent UBS conference, Macaluso said that the company owns a valuable treasure chest of over 100 compounds they are developing as needed.

Additionally, Ampio is advancing NCE001, an exciting new class of cancer treatment drug that has shown amazing in vitro results. NCE001 has the potential to surprise very big.

Ampio also developed a revolutionary diagnostic called, "Oxidation Reduction Potential", "ORP", that has the potential to save millions of lives and billions of dollars.

Aegis Capital has a price target of $12 but that seems conservative given their pipeline and its' mature stage of development. Ampio's financial filings indicate about $17 million in cash that should be enough to last until 2014.

Solta Medical, Inc.

Solta Medical, Inc. (NASDAQ: SLTM) is a world leader in the fast growing area of aesthetics Millions of the world's aging population and overweight population have a strong desire to appear younger and leaner and Solta Medical provides the equipment and simple solutions for physicians to safely offer wrinkle reduction and fat loss with non-invasive procedures.

The market for Solta's products is immense because it is estimated that 69% of the U.S. population is either overweight or obese. There are also millions of people who want to look younger with non-invasive wrinkle removal procedures and millions of patients with acne who want clear skin.

One of Solta's many products, VASER Shape, is so effective that the world famous Dr. Oz endorsed it on his popular television show. Another procedure with strong consumer appeal is VASER Lipo where Solta's equipment and procedures are less invasive than traditional liposuction but yet offer amazing results. This video demonstrates why VASER Lipo is so appealing.

The company offers aesthetic energy devices for skin resurfacing and rejuvenation, acne reduction, body contouring and skin tightening, as well as tools and accessories to optimize the latest liposuction techniques. The Solta Medical portfolio includes the well-known brands Thermage®, Fraxel®, Clear + Brilliant®, Liposonix®, Isolaz®, CLARO®, VASERlipo™, VASERshape™, VASERsmooth™, VentX®, PowerX®, TouchView®, and Origins™.

Solta Medical is already flowing substantial revenues with sales increasing by 25% from 2011 to over $144 million reported for the year ending December 31, 2012. Solta Medical has seen more than two and a half million procedures performed with their portfolio of products in over 80 countries around the world.

Solta's recent acquisition of Sound Surgical is expected to add $25 million in sales from VASER products that are expected to grow very rapidly because of the big demand for their outstanding performance and non-invasive to minimally invasive nature.

On December 31, 2012, Solta reported a healthy position of almost $40 million in cash and over $80 million in current assets with less than $60 million in current liabilities. Solta is trading at $2.15 per share, down from $3.50 in the past year and down from it's all time high over $10.00 per share. Cantor has a $4.00 per share price target, but if the VASER line takes off as expected, this price may be too low and Solta could higher prices in 2013.

Solta has been revamping their sales force and it would not be surprising to see a large advance in their share price very soon.

All three companies are small cap and as such bear the risk of small cap companies in that a trial may fail, a product may not achieve the targeted sales and profit margins or the company may not be able to raise adequate capital to be an ongoing business. All three companies appear to offer excellent risk to reward ratios.

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