Zevra Therapeutics, Inc.
Q2 2017 Earnings Call Transcript

Published: 10 Aug 2017

[Executives:]

Dan Cohen - Executive Vice President of Government and Public Relations Travis Mickle - Chairman of the Board, President, Chief Executive Officer LaDuane Clifton - Chief Financial Officer, Secretary and Treasurer

[Analysts:]

[Operator:]

Good day ladies and gentlemen and thank you for standing by. Welcome to the KemPharm second quarter 2017 corporate update conference call. [Operator Instructions]. I would now like to introduce your host for today's presentation Mr. Dan Cohen. Sir, please begin.

[Dan Cohen:]

Thank you and good afternoon everyone and thank you for joining our call today. At this time, I would like to remind our listeners that remarks are during this call may contain forward-looking statements that involve risks and uncertainties that are subject to changes at any time including, but not limited to, statements about KemPharm's expectations regarding future operating results. Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the Federal Securities Laws. Information contained in the forward-looking statements is management's beliefs based on current expectations and is subject to change. Actual results may differ materially from forward-looking statements. KemPharm disclaims any obligation to update such remarks, factors or announce publicly the results of any revisions to any forward-looking statements to reflect future events or developments, except as required by law. There is more complete information regarding forward-looking statements, risks and uncertainties in the reports KemPharm files with the SEC. These documents are available on KemPharm's website at www.kempharm.com under the Investor Relations section. We encourage you to review these documents carefully. Before I introduce today's speakers, I would like to note that KemPharm is using a slide presentation with the conference call. This presentation is also accessible via the Investor Relations section on KemPharm's website and is included with this webcast. Joining me on the call today will be Travis Mickle, President and CEO, who will provide an update on KemPharm's corporate and clinical development achievements and LaDuane Clifton, our CFO, who will review KemPharm's second quarter 2017 fiscal results. At that time we will conclude our remarks. There will be however no question-and-answer session today. I will now turn the call and the presentation over to Travis.

[Travis Mickle:]

Thank you Dan and welcome everyone to KemPharm's second quarter 2017 financial and business update conference call. As Dan mentioned, we have provided a brief slide presentation to accompany today's remarks. This second quarter continued what has been a very active 2017 for KemPharm and was highlighted by what we believe are important and significant advances with our ADJD portfolio which includes KP415 and the development of a new ADHD pro-drug candidate KP484. The progress we've have made with each product as well as our pain portfolio has been substantial and should set the stage for a busy second half of the year and early 2018. For KP415 we previously announced the successful completion of the end of Phase 1 meeting with the FDA and this morning we continued a strong momentum with an announcement of data from a confirmatory pharmacokinetic study of KP415 as well as additional pharmacokinetic data from studies to support both programs KP415 and KP484 including single dose and food effect with the normal breakfast with just the prodrug. These encouraging developments are the beginning of an extremely active productive clinical program for both KP415 and KP484 which will entail multiple operational and date announcements over the coming quarters. As stated previously we believe KP415 is our highest value pro-drug product and one that could potentially capture a significant share of the $13 million plus ADHD market should it be approved. However KP415 is no longer our only ADHD candidate. In June we also announced the development of a new product candidate KP484 which we plan to develop for ADHD indications that may benefit from an extended duration of treatment. Separate and apart from KP415, KP484 should enable KemPharm to now target the adult population of ADHD patients specifically with data suggesting an ability for this pro-drug to produce a longer duration release of the dimethylphenidate relative compared to products available on the market today. Our plan is to develop KP484 in parallel with KP415 and leverage data from our current and ongoing KP415 research including the PK already described CMC and Human Abuse Liability studies. The multiple near term and longer range clinical and regulatory milestones now anticipated with our ADHD prodrug portfolio offer an opportunity to propel KemPharm to position of strength in the ADHD market. As companies compete to develop next generation drug products that better address the needs of all patients. We believe our ADHD pro-drug portfolio is not only our most valuable asset but is also one of the most promising ADHD pipelines in the industry with the potential to address important treatment needs across the ADHD patients spectrum. In addition to the significant activity with our ADHD portfolio our pain pipeline continues to advance. Recently we presented clinical data for KP511 at the International Conference on Opioids and we were pleased to announce the first U.S. patent for KP746 our novel pro-drug of oxymorphone. As well earlier this week the peer review journal Pharmacoepidemiology and Drug safety published a study that evaluated the patterns of abuse and how immediate release hydrocodone acetaminophen combination products are administered. These results confirm that internasal abuse of hydrocodone acetaminophen by adolescents and adults is potentially a significant public health issue supporting a key thesis in our development program for Apadaz our combination of product of [indiscernible] and acetaminophen. With respect to Apadaz we anticipate resolution of the formal dispute review requests for FDRR our rocess with the FDA in the near future. The progression of the FDRR meetings has unfolded as we have hoped with important clarity and insight into the ultimate decision making requirements of the agency for acceptable product labelling. Collectively these internal opportunities should add significant value to KemPharm in the balance of 2017 and 2018 while serving the highlights of vast potential of ligand activated therapy or LAT prodrug platform. As discussed on prior quarterly conference calls KemPharm is first and foremost a prodrug discovery company, our mission is to build portfolio prodrugs they're an improvement on currently approved drugs and addressed unmet medical needs in large established markets. We have built an expertise in prodrug science and application and our library of knowledge and scientific experience is unmatched. We continue to see a significant opportunity to identify new prodrugs for internal development for ultimate out licensing or discovery new prodrugs in partnership with other pharmaceutical companies. In our estimation prodrugs offer an attractive risk/reward profile and they can both improve their performance of the parent drug and offer a developmental time horizon that is vastly shorter than a traditional new chemical entity this is because the active ingredient is usually known to be safe and effective therefore extensive clinical trials are typically not necessary. Moreover because prodrugs are considered new molecular entities they may be eligible for patent protection as novel compositions a matter provided that all other applicable requirements are met. There are no better example of the multiple advanced advantages of our LAT prodrugs platform than our ADHD portfolio. With the continued rapid advancement of KP415 coupled with the development of KP484 KemPharm now boast two differentiated ADHD product candidates that have the potential to meet key patient and prescriber needs potentially enabling KemPharm to eventually capture a portion of the large and growing ADHD patient market. KP415 are extended release [indiscernible] prodrugs formulation for the development -- for the treatment of ADHD is one of our highest priority pipeline candidate and we believe our greatest near term value driver. The prodrug is designed to address the unmet needs with currently marketed dimethylphenidate ADHD treatments including earlier onset of therapy, longer total duration of therapy and consistency of the therapeutic effect. In addition the pro-drug offers the possibility of a lower abuse potential. As disclosed in June the KP415 end of Phase 1 meeting with the FDA was favourable. In a professional and positive exchange we reviewed the data from the Phase 1 proof of concept clinical trial of KP415 additional non-clinical and manufacturing data sets and the proposed clinical and non-clinical programs required for eventual submission of an NDA KP415. Additionally we discussed the proposed commercial formulation of KP415 which KemPharm plans to develop with immediate release of dimethylphenidate to potentially support a superior early onset of action. Based on this meeting we plan to advance our proposed commercial formulation of KP415 into a single human efficacy trial which we expect to initiate prior to year end. The intent with the efficacy trial is to produce data that demonstrates a very early onset as soon as a half hour and lasting up to 13 hours providing a total duration of upto 12.5 hours, a profile that we believe is well suited for most ADHD patients. While data from the pivotal efficacy study won't be available until the first half of 2018 indications of this release profile were demonstrated in the pharmacokinetic data set that was announced this morning. As outlined in the press release the KP415.109 study was designed to assess the relative PK of three different combinations of the KP415 pro-drug with immediate release deemed dimethylphenidate. Data from the study demonstrated that the projected early peak exposure due to the immediate release dimethylphenidate which was followed by sustained exposure from extended release program prodrug over the course of the day. We view this PK study as an important building block to full KP415 data profile. Additional PK studies adjust the pro-drug have examined metabolic clearance, dose proportionality and food effect and have all confirmed the PK data we have expected since our initial announcement in December of '16. The combined data will be used to support both for KP415 and KP484. Should the results of the efficacy trial prove favorable we believe based on the end of Phase 1 meeting that the single pivotal trial and the non-clinical and manufacturing data sets will be sufficient to file a KP415 NDA with the FDA by the end of 2018. Further we are planning to soon initiate a human abuse liability or AHL program for KP415 beginning in the second half of 2017 to assess abuse potential. Intravenous AHL how data should be available prior to the end of the year, again the data from all of our anticipated house studies should support labeling and the NDA submissions for both KP415 and KP484. Focusing now on KP484 we're very excited to add this product to our ADHD prodrug portfolio and look forward to developing it as a super extended release version of the dimethylphenidate design for the treatment of ADHD in patients that require a longer duration of therapy beyond both KP415 and the currently available methylphenidate treatments. As highlighted in the June announcement KP484 was developed during the data analysis of KP415 Phase 1 study in which we observed that the project molecule demonstrated an ability to produce a long duration release of dimethylphenidate which may be well suited to the unique needs of the adult ADHD patient and potentially similar to the recently approved [indiscernible] which is in an amphetamine based product. Given this potentially significant opportunity we are moving rapidly to file an IND application for KP484 in the third quarter of this year. Should the application be accepted our plan is to develop KP484 along a similar pathway as KP415 with efficacy studies of KP484 initiating in 2018. As noted previously both ADHD programs are expected to leverage data from our current and ongoing research including the PK in-house studies, non-clinical data as well as manufacturing which should allow us to progress along an expedited development timeline and towards a potential NDA in 2019. As noted earlier we believe our ADHD prodrug port is our most valuable asset and may be one of the most promising ADHD pipelines in the industry. In 2016 methylphenidate accounted for approximately 19.8 million prescriptions and 3.8 billion in sales, however patent expiration in the ADHD space is eroding and the revenues of branded products such as Focalin and Concerta even [indiscernible] a prodrug of amphetamine and the branded market share leader in the estimated 13 billion plus ADHD market will lose patent expiration in 2024. Despite the movement of generic therapies into the ADHD space, leading ADHD clinicians that we have spoken with have expressed strong interest in and solid support for methylphenidate product or products with a highly differentiated features of improved duration of effect and/or consistent delivery with the benefit of earlier onset and a lower abuse potential than current methylphenidate products. A deeper look into the ADHD market dynamics suggest that KP415 and KP484 could offer the potential to address important patient and prescriber needs as well as fill key voids in the ADHD therapeutic landscape. For KP415 which we're developing for a broad base of patients there is potential alignment with several market opportunities. First as a prodrug of methylphenidate KP415 fits well with market data that indicates that many prescribers refer to utilize methylphenidate rather than amphetamine as the first line of therapy with children nearly 60% of the time yet has been -- really has been underutilized in adults. Additionally KP415 has the potential deliver three key advantages for the ADHD market as indicated by prescribers. Total duration of therapy, lower abuse potential and early onset of action. Further the design of KP415 may be advantageous to all patients and that the small capsule size is easily swallowed and for those patients that have difficulty swallowing a capsule keep KP415 can be opened and the contents sprinkled on food or mixed with liquids for easier indigestion. Weighing all of these factors we believe that KP415 if approved has the potential to be one of the first truly differentiated methylphenidate products launched in the ADHD market. The same is true of KP484 which we're developing to primarily address the large and growing population of adult ADHD patients. It is estimated that 4.4% of all adults have ADHD in U.S. When implied to the full US adult population aged 18 and over approximately 10.5 million adults are estimated to have a ADHD making adult patients the largest segment of the ADHD market. Since 2010 the adult ADHD market has grown 11% year over year compared to 4% year over year growth in paediatrics. KP484 offers the potential to meet this increasing demand in adult ADHD treatment which despite the rapid patient population growth has been overshadowed by the paediatric market. The last seven products launched in the ADHD space have been solely focused on the paediatric patient. This is changing with the anticipated launch of Mydayis which is a super long acting version of AXR or Adderall XR which is intended to address this market need. Shire clearly sees the same opportunity that we do given that Vyvanse has produced a 22% year over year growth in the adult market since 2009 and its adult sales are expected to surpass paediatric in 2017. The lack of an adult focused ADHD patient treatment is one part of the sizable adult ADHD market opportunity, another significant need is also an area that KP484 seeks to address. The introduction of a once daily ADHD product that eliminates the necessity for ADHD patients to take multiple drugs during the day to ensure consistent treatment of their symptoms. This has the additional benefit in the patients would require fewer prescriptions and your fewer co-pays compared to current market activity. Current estimates indicate that of the $38 million patients on ADHD medications 9% require two ER medications to bridge the day while 10% utilized a similar ER and an IR product approach. Based on these and other factors we believe the growth potential of a once a day adult ADHD treatment market is favorable and the KP484 could enter the market as the first once a day adult methylphenidate product. Additionally KP484 could provide an opportunity to address several potential indications beyond ADHD where stimulant based therapies have shown effectiveness. These include binge eating disorder, excessive daytime sleepiness, stimulant dependence and as an adjunctive therapy for other CNS [ph] disorders. We are very pleased to add KP484 to our ADHD portfolio given KemPharm five clinical stage assets in active development. As a reminder our continued investment in abuse deterrent opioids with a strategic and [indiscernible] decision based on the Apadaz FDRR process market and regulatory clarity as well as the changing political environment. With that I would like to now hand the call over to our Chief Financial Officer, LaDuane Clifton who will review our financial results.

[LaDuane Clifton:]

Thank you, Travis and good afternoon everyone. I will provide a brief overview of our results for Q2 of 2017. Additional details are available on our press release which was published prior to the call. For the second quarter of 2017, we reported a net loss of $6.5 million or $0.44 per basic and diluted share as compared to a net income of $9.8 million or basic net income per share of $0.59 and diluted net loss per share of $0.58 for the second quarter of 2016. The net loss for Q2 2017 was primarily driven by an operating loss of $8.2 million and net interest expense and other items of $1.8 million which was offset by recognition of income from a non-cash fair value adjustment of $3.1 million during the quarter. As of June 30, 2017 total cash, cash equivalents, restricted cash, marketable securities and long term investments totalled 65.8 million which was a decrease in our cash position of about 6.6 million compared to March 31, 2017. Our updated forecast continues to show an expected cash burn rate of approximately 7 million to 9 million per quarter. This leaves KemPharm in a solid capital position with existing resources expected to fund our development and operating activities through the second quarter of 2019. Now I will return the call back to Travis.

[Travis Mickle:]

The second quarter of 2017 was an important step in the continued growth of KemPharm with the introduction of KP484 to our pipeline and the continued development of KP415. As noted earlier in the call these developments should enable KemPharm to meet multiple value building milestones through the remainder of 2017 and into 2018. It goes without saying that in the next several quarters will be an exciting time for KemPharm and should the various studies and data readouts prove favorable we could be in the position to file multiple NDAs in the coming years. As I've stated on previous calls KemPharm's ability to offer an accelerated and derisk development timeline as well as composition of matter protection on any new molecule we develop is we believe highly attractive considering we announced our updated clinical development strategy less than a year ago. It speaks volumes about the efficiencies of our prodrug platform and our ability to rapidly advance programs from IND to NDA. With that I would like to thank you for your time and listening to our call today and that would be the end of our call.

[Operator:]

Ladies and gentlemen thank you for participating in today's conference. This concludes the program. You may not disconnect. Everyone have a wonderful day.

[End of Q&A:]