Ampio Pharmaceuticals'  (AMPE) plan to cast off its premature ejaculation and erectile dysfunction drugs into a separate publicly traded company is a nice bit of spin necessitated by the failure to find a partner for the drugs or start late-stage clinical trials by year's end, as previously promised. 

The new standalone company, Viryx Pharmaceuticals, will be tasked with developing Zertane and Zertane ED, Ampio announced Friday. Zertane is a mint-flavored tablet formulation of the old and generic painkiller tramadol. An initial public offering of Viryx shares will be attempted, with Ampio retaining 50-80% ownership stake.

Ampio CEO Michael Macaluso:

The spin off and subsequent funding, if completed, would give both Ampio and Vyrix greater flexibility to focus on and pursue their respective development strategies while potentially providing shareholders with greater value over the longer term.

Yet for most of the last two years, pursuing the approval of Zertane and finding a partner were Ampio's stated goals. Phase III studies required for U.S. approval were supposed to start by the end of 2012. Ampio missed that deadline.  Management's promises to find a partner for Zertane this year have also gone unfulfilled.

Friday's announcement was short on details about how, exactly, Ampio was going to accomplish the Viryx public offering. The new company has a CEO, Jarret Disbrow, the former CEO of Arbor Pharmaceuticals, but little else. A registration statement for the proposed Viryxa IPO has not been filed with the SEC.

Ampio said the process could take up to a year to complete and the company doesn't intend to provide investors with regular updates. Of course, this means the start of the required Zertane clinical trials is being delayed even further. 

Why investors would be interested in owning newly minted Viryx shares also isn't clear. Zertane is not unique.  It's a new use for the old and generic (i.e. cheap and widely available) painkiller tramadol, formulated into a mint-flavored tablet that dissolves quickly in the mouth. Ampio claims the safest and most efficacious dosages of Zertane for premature ejaculation are 62 mg and 89 mg. Rather random-sounding dosing, except when you understand that standard tramadol can be easily prescribed at a 50 mg dose. Few doctors are going to prescribe Zertane at a higher cost when regular tramadol is already available and much cheaper.

Investors have had a healthy appetite for biotech and drug IPOs this year, although not much lately. Several recent IPOs have been cancelled due to lack of investor interest. 

Last month, Oculus Innovative Sciences  (OCLS) failed to spin off its prescription-grade diluted bleach product into a new public company called Ruthigen. Ampio's Viryx sounds a lot like Ruthigen.

Ampio shares closed Friday at $6.74.

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.