KemPharm, Inc.

Thank you for standing by and welcome to the Kim Farm first quarter 2022 results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's call may be recorded. Should you require any further assistance, please press star 0. I would now like to hand the call over to your host, Jason Rondeau. with TBRAN Strategic Advisors. Please go ahead.

Good afternoon and thank you for joining our call today to discuss ChemPharm's first quarter 2022 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 change 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 those required by law. More complete information regarding ChemPharm's forward-looking statements, risks, and uncertainties can be found in ChemPharm's filings with the SEC. which are available on the company's website under the investor relations section. Speaking on today's call will be Travis Mikkel, ChemPharm's president and CEO, and LaDwayne Clifton, CFO. Following remarks, there'll be a question and answer session. With that, it is my pleasure to introduce Travis.

Thanks, Jason, and thanks everyone for joining today. For those that aren't as familiar with ChemPharm, I'll just give a brief introduction here. and discuss our value proposition. ChemPharm historically has been focused on the discovery and development of prodrugs. We, to date, have two FDA-approved and partnered medications in Astaris and Apidaz, and certainly has been the history of the organization. As we announced back in January, our new focus is on rare disease and CNS drug development, looking at innovative therapies, including, in this particular case, a prodrug, but we're not subject to that limitation. It's this development of these novel treatments we believe will create the largest value for us and our shareholders in the future. Today's update will actually be relatively short. We did provide an update just last, about six weeks ago, as well as been making great progress on all of the items that we discussed and had planned for this quarter. There are several items that I have in the update here. that we'll be looking forward to scheduling and or updating as we move forward. So in the second, in the first quarter, excuse me, in the first quarter we accomplished a number of different goals that we had, as well as in the early part of the second quarter here we filed the IND for KP1077 for the treatment of idiopathic hypersomnia. as well as got underway with the planning and the trial initiation around the phase two. That should initiate officially in the second half of this year. Once that study initiates, we'll shortly follow that with the narcolepsy trial, so those two will be working almost in parallel at that point. I think most importantly, and with the near-term sort of milestone that we have for KP1077, is our cardiovascular trial. This is looking at the safety of doses used. And I have a little more data here to provide, but we actually should have a data readout in that in the third quarter. And this is key differentiation for that particular product. We did provide a little wholesome description of how Astaris is proceeding. Of course, this is our ADHD product partnered with Corium, where they expanded the launch of Astaris to support that what we still believe is the opportunity to earn milestones and royalties in the continuing part of this year. I did mention on the last call that we are planning to have an update from Corium. We're still in the planning stages of that. Of course, it's not on the near-term horizon. We're kind of looking at what time ideally works for them, as well as trying to time that when it may be most effective for them to discuss an upcoming school year I did mention, you know, our attempt here to move forward and build a pipeline of differentiated assets in the CNS and rare disease space. We have an internal product candidate that we plan to advance into development stage, and we'll be announcing that more than likely this quarter. Again, it's an expansion upon some of the internal work we've done, so a little bit earlier in that process. And then Ludwine will be providing us a financial update on this call that includes our strong balance sheet to support all of our efforts in external business development, internal development, as well as advancing some of our own candidates. If we look just very quickly here at our pipeline, I've already mentioned KP-1077 for the treatment of idiopathic hypersomnia, as well as our plans to develop that in narcolepsy. Both of these are rare sleep disorders many of you may be familiar with. Again, these both have milestones with trial starts later half of this year and shortly after the idiopathic hypersomnia in the case of narcolepsy. We do have an internal candidate we hope to advance this quarter. We can have that announcement once we have all of the details around that available to us. And then as I mentioned, Previously, and as we've discussed before, we continue our activities around business development, looking for late-stage assets that we can acquire and license that would add value to our pipeline, whether it be near-term value or a little bit later, say, a phase two. Again, looking for good value that we can add, potentially with our technology as well, and develop those products to potential commercialization. So let me just turn briefly here and discuss some of the product attributes and then as well the trial that I've discussed a few times now on the cardiovascular safety. So KB1077 actually consists of 100% of Sirdex methylphenidate, also known as SDX. This is the prodrug that's 70% of the product in Astaris. So it's something we understand and it's been well studied. It's also already designated as a Schedule IV drug. by the DEA. When we look at the product candidate, what we like about this is there's already features and benefits that distinguish it from the alternative products. So this would be generics, as well as modafinil and other products that could be used to treat idiopathic hypersomnia. And so one is, of course, the scheduling feature. Another is the fact that it doesn't have drug-drug interaction potential with contraceptives and antidepressants, which are actually used quite heavily in that population. What we're trying to show here is the potential additional features and benefits that could be studied. So we have a hypothesis. We really believe there's great support for it. As we get greater tolerability, i.e., less side effects, less issues with cardiovascular effects, less issues with some of the issues that can happen with stimulants, we believe we're going to be able to provide a higher dose. The higher dose should be more effective. We also believe we have our dosing regimen that's actually unique here, where a dose in the evening will start to work in the morning, provide that additional lift, as it were, in the waking hours. This is a major side effect issue symptom of IH. And then as the day progresses, the morning dose we'll be able to provide that relief from the other major symptom, which is brain fog. And we all know that methylphenidate is great at helping with cognitive abilities. It's just given the severe detriment here of brain fog, we believe that we'll actually be able to show a bigger difference. The product itself is, of course, eligible for fast-track, orphan drug, and breakthrough therapy designations and has solid IP through at least 2037. So specifically looking at the cardiovascular study and why we believe this is important. As I mentioned, brain fog is one of the most debilitating symptoms of IH. It's something that is inadequately addressed by current therapies, whether that's off-label, well, it's actually off-label for most IH patients. The ability to actually dose higher, provide more methylphenidate, we believe is going to provide a greater effect and actually be more effective at treating brain fog. The cognitive enhancement that you can receive with methylphenidate due to the neurostimulation has been well documented. It has its limitations in this population as you have a dose limitation, not just from a safety perspective, but from a side effect perspective that physicians see. High blood pressure and heart rate are known to increase with stimulant treatments. And this is more to do with their immediate release or their double extended release features. STX comes on very slowly under a nice gradual curve that increases to about a peak about eight hours after dosing. And then, again, comes down very slowly towards the end of that day. We believe that profile will allow us to dose higher and have less cardiovascular issues related to its dosing. We have a study that we initiated. It's ongoing right now. In order to assess that cardiovascular safety head-to-head with both immediate release and locked-acting formulations of Ritalin, these are the only two products that are actually approved to treat narcolepsy, a related rare sleep disease. And we should have top-line results from that as early as the Q3 this year. So with that quick overview, LeDwayne, I'll pass it over to you for financial update, and we'll conclude with some upcoming milestones.

Thank you, Travis, and good afternoon. For Q1 of 22, we had revenue of $4 million derived primarily from consulting service fees. There were some royalties, and then the success fee that we had reported out on from Corium related to our assistance in the approval of their product called Edlarity. For this quarter, we had a net loss of about $1.9 million, or $0.05 per basic and diluted share. And I would say as we look forward to the rest of the year, as you would expect, R&D expense will begin to increase quarter over quarter as the KP 1077 program continues forward. Looking at the balance sheet, we remain in a very strong position. with a balance at the end of the quarter of $119.1 million. And as we've noted in prior quarters, we remain confident this extends our cash runway well beyond 2025. And so we have everything we need to execute our strategic plans, as well as the development programs for 1077 that Travis has enumerated. So with that, Travis, I'll turn it back to you. Thanks for doing it.

So looking forward at the upcoming milestones, of course, some of these we've already hit. Again, the phase one trial, the IND filing that occurred this quarter, type B meeting with the FDA in the first quarter. We should have, again, the data from the cardiovascular differentiation trial in the third quarter and be initiating the phase two trial in the second half of this year. And shortly after then, of course, we would start the process in narcolepsy. Though, of course, we'll have the Type B meeting and the IND prior to that trial initiation. We already had, and I didn't mention here, some results on KP879, and we continue to look for external funding and collaborations. That's been part of our plan for that particular candidate. And then, just briefly to remind everyone, we do expect the last half of this year to have some additional clinical stage candidates that we bring in through our business development efforts. So with that, I'd like to thank everyone for your time and see if there's any questions.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Again, that's star 1 on your touchtone telephone to ask a question. Please stand by while we compile the Q&A roster. Again, to ask a question, press star 1 at this time. There appear to be no questions in queue at this time. Are there closing remarks?

Yes. Again, I want to thank everyone for the time. I hope to continue to meet the progress that we've shown already this year and the last half of last year, and we'll continue to report and update as we have new information available. Thanks, everyone.

Thank you. This concludes today's conference call. Thank you for participating.