On February 28, 2020 KemPharm, Inc. (Nasdaq: KMPH), a specialty pharmaceutical company focused on the discovery and development of proprietary prodrugs, provided an update on the KP415 NDA and reported its financial results for the fourth quarter and full-year ended December 31, 2019 (Press release, KemPharm, FEB 28, 2020, View Source [SID1234554990]).
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"Our highest priority at KemPharm is filing the New Drug Application (NDA) for KP415, our prodrug product candidate of d-methylphenidate (d-MPH) being developed for the treatment of attention deficit hyperactivity disorder (ADHD)," said Travis C. Mickle, Ph.D., President and Chief Executive Officer of KemPharm. "During the last several months, we have been working hand-in-hand with the team of advisors assembled by our partner, Gurnet Point Capital (GPC), with the primary goal of submitting the best NDA for review by the FDA (U.S. Food and Drug Administration). We believe this investment in time and additional review will improve the probability of acceptance and subsequent approval of KP415 with the best possible label. The timing for the filing of the KP415 NDA is subject to the discretion of GPC and we anticipate receiving their approval to proceed shortly. We intend to file as soon as possible and remain on track to submit the NDA this quarter."
Dr. Mickle continued, "Once the KP415 NDA is submitted to the FDA, our full attention will be focused on ensuring a successful completion of the regulatory review process with the goal of achieving approval for KP415 with the broadest label. KP415 has the potential to be the first truly differentiated methylphenidate-based product introduced to the ADHD market in several years. This market accounted for approximately $3.9 billion in sales in 2018, and we believe KP415’s potential attributes, including onset of action at 30 minutes, duration of effect of 13 hours, and substantially lower abuse potential than relevant d-methylphenidate comparators, could provide a solution to these unmet needs that have been repeatedly cited by both patients and prescribers."
Q4 and FY 2019 Financial Results:
For Q4 2019, KemPharm reported revenue of $1.4 million from research and development services, as compared to Q3 2019 revenue of $11.5 million, which was comprised of a one-time upfront payment of $10 million under the KP415 License Agreement (as defined below), and research and development services revenue of $1.5 million. This is KemPharm’s second sequential quarter reporting research and development services revenue, and the Company expects this trend to continue as the Company provides services to GPC and its affiliates under the license agreement by and between KemPharm and Commave Therapeutics, S.A., an affiliate of GPC, dated September 3, 2019 (the KP415 License Agreement).
KemPharm’s net loss for Q4 2019 was $6.0 million, or $0.18 per basic share and diluted share, compared to a net loss of $5.2 million, or $0.20 per basic and diluted share for the same period in 2018. Net loss for Q4 2019 was driven primarily by an operating loss of $4.4 million and net interest expense and other items of $1.8 million. The net operating loss of $4.4 million for Q4 2019 was a decrease of $4.9 million compared to $9.3 million in the same period in 2018, which was primarily due to revenue of $1.4 million, a decrease in research and development expenses of $3.8 million and a decrease in general and administrative expenses of $1.6 million, offset by royalty and direct contract acquisition costs of $1.9 million.
For FY 2019, revenue totaled $12.8 million, which is comprised of the $10.0 million upfront payment under the KP415 License Agreement, and research and development services revenue of $2.8 million. KemPharm’s reported net loss was $24.5 million, or $0.83 per basic and diluted share, compared to a net loss of $56.5 million, or $3.15 per basic and diluted share for the year ended December 31, 2018. FY 2019 net loss was driven primarily by operating loss of $20.3 million and net interest expense and other items of $6.2 million, partially offset by non-cash fair value adjustment income of $2.0 million. Operating loss for FY 2019 of $20.3 million was a decrease of $35.6 million compared to the FY 2018 operating loss of $55.9 million, which was primarily due to FY 2019 revenue of $12.8 million, a decrease in research and development expenses of $22.3 million, a decrease in general and administrative expenses of $1.7 million, and a decrease in severance expense of $1.6 million, offset by royalty and direct contract acquisition costs of $2.9 million.
As of December 31, 2019, total cash and investments, which is comprised of cash, cash equivalents, and restricted cash, was $3.6 million, which was a decrease of $3.4 million compared to September 30, 2019. Based on the Company’s current operating forecast, existing resources are sufficient to continue operations into, but not through Q3 2020. Existing resources combined with the potential milestones and revenue under the KP415 License Agreement have the potential to extend the cash runway into, but not through, Q1 2021.
"The measures we have taken to reduce our operating spend and restructure our debt obligations, as well as the potential milestones and revenue under the KP415 License Agreement, potentially extend our cash runway into, but not through, Q1 2021," stated LaDuane Clifton, KemPharm’s Chief Financial Officer. "We expect research and development services revenue to continue through FY 2020 and beyond as we provide consultation services to support our partner in their commercial preparation activities for KP415 and with the potential initiation of the product development plan for KP484."