KemPharm, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to CAMFARM First Quarter 2021 Results Conference Call. At this time, all participants are on a listen-only mode. After this week's presentation, there will be a question and answer session. Please be advised that today's conference may be recorded. If you recall our assistance, please press star then zero. I would now like to hand the conference over to your speaker host, Jason Randall at Tiburon Strategic Advisors. Please go ahead.

Good afternoon. Thank you for joining our call today to discuss ChemPharm's first quarter 2021 financial and corporate results. Before we begin, I would like to remind our listeners that remarks made during this call may contain forward-looking statements that involve risks and uncertainties and are subject to changes at any time, including but not limited to statements about ChemPharm's expectations regarding future operating results. Forward-looking statements are made pursuant to the safe harbor provisions of the federal securities laws and represent management's current expectations. Actual results may differ materially. ChemPharm disclaims any obligation to update or revise its forward-looking statements except as required by law. More complete information regarding forward-looking statements, risks, and uncertainties can be found in ChemPharm's filings with the SEC, which are available on ChemPharm's website under the investor relations section. Speaking on today's call will be Travis Mikkel, ChemPharm's President and CEO, and the Dwayne Clifton CFO. Following the remarks, there'll be a question and answer session, which will include responses to questions that were submitted during the past week. With that, it is my pleasure to introduce Travis.

Thanks, Jason, and thanks everyone for joining us today. As most of you know, and I'm sure all of you that joined the call are aware, the FDA approved Starus back in March 2nd. Certainly one of our large highlights here from the first quarter of this year. We do expect our partner Corium to launch that product in the second half, presumably around the start of the school year, if all things go well. We also announced during this quarter a number of different highlights, including an amendment that happened after the first quarter. to the license agreement, now eligible to receive up to $590 million in sales milestones, and royalties on top of that that go out to the length of the patents. We also recently just announced that Sirdex methylphenidate, which is the prodrug in Astaris, received a Schedule IV classification. This is the only methylphenidate product that is a Schedule IV classification. actually the only methylphenidate product that's any different schedule than a Schedule II. And I will actually walk through a little bit of those key differences and how they're prescribed and handled, the differences there between those two classifications. Just to say it's fairly meaningful for a patient, a physician, and a pharmacist, and we believe it provides a key differentiator for Astaris as well as potentially KB484, and our own product, KP879. LeDwane is here to discuss all the great things he's accomplished since the beginning of the year, so I won't take away much of his thunder there. Of course, the big ones being complete transformation of our financial situation, relisting on the NASDAQ, repaying all the debt, and putting us in a great position to amend the agreement and be able to invest in our own future again. as well as have ample capital to do what we need to do strategically and with the organization moving forward. And then beyond the SARS, we're actually getting very excited now about the initiation of a clinical trial in mid this year on Kp879. That is our lead product for the treatment of Stimulant Use Disorder or Stimulant Addiction, extremely exciting product, a unique opportunity there. We still are working under the expanded services agreement with Quorium, and we continue to watch with our partner, KVK Tech, and the launch of Apidas. And as soon as we're able, we'll give more details on how that is progressing. Turning now in more detail to the Astaris approval, certainly this was a transformative event for the organization. Our second product approval really a huge opportunity when you think about the product itself and its differentiation in the marketplace. When you look at our previous commercial forecast, they're really just based on things like efficacy and safety, really being very similar in safety to other products. And what we were able to achieve with our studies, as well as in negotiations with the agency, we were able to include benefits around the administration of the product heightened weight changes that showed no difference from placebo or from the typical heightened weight growth you would expect, pharmacokinetic differences, as well as the efficacy data that we've discussed all along. It was those key differentiations that led us to revise our own commercial models, of course, working with Corium to do so, and realized we had a great opportunity to amend the agreement. and possibly make additional investment in the near term for the launch of the product and ultimately receive more upside as we believe it will be quite successful in the near term. So to that, moving on to the amendment itself, we were able to actually work with the GPC team to renegotiate and increase the regulatory and sales milestones from what they were at $468 million up to $590 million. You can see that's a substantial increase. It also added a top-tier sales royalty that is higher than the previous mid-20s level and increased that royalty rate throughout the life of the patents. We received our $10 million regulatory milestone for the approval of Astaris. And now, of course, now with the scheduling, We're eligible for that other $10 million that I'm sure we'll receive just on time from our partner there. There was four additional sales-based milestones that were added. Three of those are relatively near-term and weren't present before. They're at the lower tiers, so between zero and kind of a mid-level. We think those are very achievable in the next few years and something that we believe allows as well our partner to reinvest in manufacturing and clinical studies that will help the product overall. Overall, we're very excited about that amendment. We believe there's a great opportunity for that product and a great opportunity to work with Corium and GPC to maximize its value. Turning to the ASTARIS commercialization, I've mentioned much of this already. I did touch on very briefly the additional manufacturing. Of course, as you would project, if you think there's going to be more sales, you're going to need more capacity. That's something that we are working with Quorium diligently to prepare for the launch as well as prepare for the future there. In addition to that, it was disclosed publicly in the summary basis of approval. there's requirements for pediatric clinical studies, mainly focused on preschoolers. So of course we're working with Corium and their team to design and conduct those trials. The timelines are very short, surprisingly so from the FDA. So we're working to get those studies conducted. I do believe that the addition of a four to five year old indication would be of more value. So you can see in part why We were working with GPC to amend the agreement with the additional cost of those studies and the additional value they can derive once those studies are on the label. Certain have heard, just anecdotally from our partner, discussions with physicians and payers have gone very well. There's initial receptivity by payers that this product has differentiated. and certainly would be something that patients would want to see. The scheduling, of course, really does add to that. Payers certainly see that as an important differentiation, but certainly physicians and patients would as well. Remember, 70% of the active ingredient in Astaris is SDX, so the product itself is still Schedule 2, but ultimately, it will be very prominently displayed on the label in the highlights of prescribing and in the view section, section 9, that this is a Schedule IV controlled substance as far as the pro-drug component. And we believe that's very straightforward and very much something that a salesperson can highlight for a physician. So let's just touch on the Schedule IV classification in a little more detail. The feedback from the DEA was very much like what they passed along from the FDA, is that the SDX really didn't show any sort of abuse liability above that of Phentermine. And we know the results of our studies did indicate that, that in fact you don't see a difference from Phentermine. when taken orally. In fact, it's actually at some doses even less. And, you know, through other routes of abuse, it was either closer to placebo or certainly far less than that of methylphenidate. And with that, the FDA recommended to the DEA that this be scheduled for. And luckily for us, the FDA, the DEA, excuse me, followed suit and agreed. And, of course, we got the notification that it would be a Schedule IV API. We believe that if we develop and take KP879 forward, that it's more than likely would also receive a Schedule IV classification. And this could be a huge benefit to a product that you're going to be giving to someone who's addicted to stimulants, someone that's trying to go through treatment, now something that's very difficult to abuse. and certainly less abusable than methylphenidate. So let me just quickly highlight for you some of the differences, key differences between a Schedule II product and a Schedule IV product. Certainly all the current methylphenidate products other than SDX are Schedule IIs. And this restriction is in place because of its potential for abuse. Now with all Schedule II products, refills are not allowed. And, of course, with a Schedule 4, those are allowed. You know, the longest script that you can receive for a Schedule 2 is 30 days. At the same time, you get the same 30-day script, as well as up to five refills, giving you a six-month total time frame that you can receive refills and prescriptions for a C4 product. So imagine this now in application for a KP879. The prescription is also easier to deliver. That means it can go to the pharmacy, phone, fax, written or electronic. Well, in the case of a C2, it has to be written or electronic only. There's no other mechanism. You can't call the physician and get them to change anything with a C2. And, of course, similar abuse potential as Phentermine. Phentermine is also a Schedule IV product. So I mentioned that product before. And you can see now we've been classified similar to that type of product. Some things that we see in addition to just Kp879, we have contemplated and are considering other STX containing products that may also receive a C4 indication with those particular products. So that could be of tremendous value or advantage for us moving forward. In addition, our amphetamine-based prodrugs, so that's been referred to as KP922, they have similar properties as STX. So we're certainly excited about the potential there that those could also receive a lower schedule if those candidates are advanced and approved. So with that, I think I've given a thorough overview of where we sit through the scheduling decision, and I'll turn it over to LeDwayne to discuss our financials.