On August 11, 2022 KemPharm, Inc. (NasdaqGS: KMPH) (KemPharm, or the Company), a specialty pharmaceutical company focused on the discovery, development and commercialization of novel treatments for rare central nervous system (CNS), neurodegenerative and lysosomal storage diseases, reported its financial results for the second quarter ended June 30, 2022 (Press release, KemPharm, AUG 11, 2022, View Source [SID1234618265]).
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"KemPharm’s recent acquisition of arimoclomol, along with substantially all of Orphazyme’s assets and operations, provided an exclamation point to the first half of 2022 as we shifted our strategic focus to the development of therapies targeting rare central nervous system (CNS), neurodegenerative, and lysosomal storage diseases," stated Travis Mickle, Ph.D., President and Chief Executive Officer of KemPharm. "We believe this orientation towards rare disease classification with limited treatment options and no approved treatments in the U.S. provides a significant opportunity for KemPharm to make an impact in an area of high-need and to validate the potential of our strategy to create both near and longer-term shareholder value."
Dr. Mickle continued, "The acquisition of arimoclomol is a unique and potentially game-changing opportunity for KemPharm. Arimoclomol is an NDA-stage product candidate being developed for the treatment of Niemann-Pick disease type C (NPC), a rare neurodegenerative disease for which no approved therapy exists in the U.S. We acquired this asset for total consideration of $18.0 million, which included a cash payment of $12.8 million and the assumption of an estimated reserve liability equal to approximately $5.2 million. The cash payment was funded through a line of credit secured by our balance sheet, making this transaction very capital efficient. Another important part of this transaction is maintaining the early access programs in the U.S. and the E.U. while we support the ongoing work of seeking regulatory approval. KemPharm is concentrating more of our resources towards the resubmission of the arimoclomol NDA with the U.S. Food and Drug Administration (FDA), which we expect to complete as early as the first quarter of 2023."
Dr. Mickle continued, "In parallel with our work on arimoclomol is the ongoing development of KP1077, our lead clinical candidate, which we are advancing as a treatment for idiopathic hypersomnia (IH) and narcolepsy. As announced in May, the Investigational New Drug (IND) application to initiate a clinical program investigating KP1077 for the treatment of IH has been successfully filed with the FDA. We expect to initiate the Phase 2 trial of KP1077 in IH by the end of 2022, with a second trial focused on narcolepsy commencing soon thereafter. Additionally, we expect to report topline results from the cardiovascular safety study involving serdexmethylphenidate (SDX) as soon as Q3 2022. We believe that demonstrating an improved cardiovascular safety profile compared to current stimulants could be a key potential differentiator for KP1077."
Dr. Mickle continued, "The execution of our strategy is continuing as KemPharm seeks to build a diverse and unique product portfolio combining an NDA-stage product with a rapidly advancing clinical-stage pipeline targeting multiple disease indications. Additionally, KemPharm continues to be excited by the commercialization of AZSTARYS by Corium. We are pleased that Perry Sternberg, Corium’s President and CEO, will join our second quarter results conference call to discuss ongoing commercialization activities and review the substantial progress made, including the recent national expansion of the launch of AZSTARYS."
Dr. Mickle concluded, "Looking ahead, we believe KemPharm is well positioned for growth on multiple fronts, while possessing a strong operational and financial foundation, including $114.5 million in cash, cash equivalents and investments as of June 30, 2022. We believe these attributes, combined with the numerous milestone opportunities anticipated for 2022 and beyond, position KemPharm for continued growth despite current macroeconomic and global equity market challenges. This is a very exciting time for KemPharm."
Q2 2022 Financial Results:
KemPharm’s net revenue for Q2 2022 was $1.3 million, as compared to Q2 2021 net revenue of $12.0 million. The Q2 2021 net revenue included a one-time regulatory payment of $10 million for the DEA scheduling of AZSTARYS.
Research and development expenses were $4.8 million for Q2 2022, as compared to $2.8 million in Q2 2021, driven primarily by spending on the KP1077 clinical development program and, increased compensation costs, including non-cash stock-based compensation expense.
General and administrative expenses were $3.6 million for Q2 2022, as compared to $2.3 million in Q2 2021. The period-over-period increase was primarily driven by increased compensation costs, including non-cash stock-based compensation expense.
In addition, KemPharm recognized $17.7 million of expense during Q2 2022 related to acquired in-process research and development from the arimoclomol asset acquisition during the quarter, which was immediately expensed.
Net loss attributable to common stockholders for Q2 2022 was ($24.0) million, or ($0.70) per basic and diluted share, compared to a net loss attributable to common stockholders of ($10.7) million, or ($0.40) per basic and diluted share for the same period in 2021. Net loss for Q2 2022 was driven primarily by the one-time non-cash expense recognized in Q2 2022 for the arimoclomol asset acquisition of $17.7 million, research and development expense of $4.8 million, and general and administrative expense of $3.6 million, partially offset by an income tax benefit of $0.7 million. Excluding the one-time $17.7 million of non-cash expense related to the arimoclomol asset acquisition recognized during Q2 2022, adjusted net loss was ($6.4) million, or ($0.19) per basic and diluted share.
As of June 30, 2022, total cash, cash equivalents and investments were $114.5 million, which was a decrease of $4.6 million compared to $119.1 million as of March 31, 2022, driven in part by increased spending on third-party research and development costs related to the KP1077 clinical trial program, and other expenses related to the arimoclomol asset acquisition. Based on the Company’s current operating forecast, existing cash, cash equivalents and investments are expected to be sufficient to continue operations beyond 2025.
Conference Call Information:
KemPharm will host a conference call and live audio webcast with a slide presentation today at 5:00 p.m. ET, to discuss its corporate and financial results for the second quarter of 2022.
The audio webcast with slide presentation will be accessible via the Investor Relations section of the Company’s website, View Source An archive of the webcast and presentation will be available for 90 days beginning at approximately 6:00 p.m. ET, on August 11, 2022.