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KemPharm Announces Entry into Definitive Collaboration and License Agreement for its ADHD Candidates | SEBIO

KemPharm Announces Entry into Definitive Collaboration and License Agreement for its ADHD Candidates

Posted by on Sep 9, 2019

CELEBRATION, FL. – KemPharm, Inc. (Nasdaq: KMPH), a specialty pharmaceutical company engaged in the discovery and development of proprietary prodrugs, today announced its entry into a definitive collaboration and license agreement (the License Agreement) with an affiliate of Gurnet Point Capital (GPC), a private investment firm focused on the life sciences and medical technology sectors.  The License Agreement provides for an exclusive worldwide license to develop, manufacture and commercialize KemPharm’s product candidates containing serdexmethylphenidate (SDX) and d-methylphenidate (d-MPH), including KemPharm’s attention deficit and hyperactivity disorder (ADHD) product candidates, KP415 and KP484.

KemPharm also announced its entry into a debt exchange agreement and other amendments to its senior debt facility (the Exchange Agreement) with funds managed by Deerfield Management Company, L.P. (Deerfield), potentially reducing its debt outstanding by up to $22 million over a period of 240 days, and up to $30 million, in the aggregate.

Under the terms of the License Agreement, KemPharm will receive an upfront payment of $10 million, and is eligible to receive pre-approval cost reimbursements, regulatory milestone payments both prior to and upon approval, and sales milestone payments totaling as much as $483 million, as well as tiered royalty payments on a product-by-product basis for net sales under the License Agreement.  These royalty rates range, on a product-by-product basis, from a percentage in the high single digits up to the mid-twenties for U.S. net sales, and a percentage in the low to mid-single digits of net sales in each country outside of the U.S.

Under the License Agreement, GPC also receives an option to certain other KemPharm pipeline programs, including KP879 and KP922.  KP879 is KemPharm’s prodrug product candidate which is also based on SDX and intended for the treatment of Stimulant Use Disorder (SUD).  KP922 is KemPharm’s newly discovered prodrug of amphetamine which is intended for the treatment of ADHD.

“We believe Gurnet Point Capital is an ideal partner for KemPharm in the ongoing development and potential commercialization of KP415 and KP484, product candidates that we believe have the potential to reshape the ADHD treatment landscape,” said Travis Mickle, Ph.D., President and Chief Executive Officer of KemPharm.  “By partnering with GPC, KemPharm has aligned itself with an organization that shares our excitement for the large and growing ADHD market, agrees with the value that KP415 can potentially bring to patients and physicians, if approved, and has the experience, resources and long-term commitment to maximize the commercial potential of both KP415 and KP484.”

“We are pleased to announce our partnership with KemPharm and to support with investment and deep expertise its focus on bringing the next-generation of ADHD treatments to physicians, patients and their families,” said Dr. Sophie Kornowski, Senior Partner at GPC.  “We believe KP415 and KP484 are significant innovations that have the potential to address unmet medical needs for patients and physicians in this important therapeutic area.  Our first priority will be to support KemPharm in achieving regulatory approval, and then to successfully launch KP415 as rapidly as possible, if approved.  In addition, we are impressed by KemPharm’s prodrug discovery and development capabilities, and we look forward to the potential to collaborate with the KemPharm team on other pipeline product candidates in the future.”

RBC Capital Markets served as KemPharm’s exclusive financial advisor.

KemPharm Enters into Debt Exchange Agreement and Other Amendments to its Senior Debt Facility with Deerfield:

Contemporaneous with execution of the License Agreement, KemPharm also entered into the Exchange Agreement with Deerfield, whereby the Company’s total outstanding debt may be reduced by up to $22 million over a period of 240 days, and up to $30 million in the aggregate.  Specifically, on September 4, 2019, Deerfield initially exchanged principal amount of $3 million of KemPharm’s 5.50% Senior Convertible Notes due 2021 (2021 Notes) for 1,499,894 shares of KemPharm’s Common Stock and 1,576 shares of KemPharm’s Series B-1 preferred stock.  Each share of Series B-1 Preferred Stock is convertible into 1,053 shares of Common Stock, based on a conversion price of $1,000 divided by $0.9494, which represents the last sale price of the Company’s Common Stock on the Nasdaq Global Market on September 3, 2019 (the Last Sale Price).  In addition, under the Exchange Agreement, KemPharm granted Deerfield a right to exchange, at Deerfield’s option, up to an additional $27 million principal of the 2021 Notes into a combination of KemPharm’s Common and/or Series B-2 Preferred Stock according to the terms and conditions of the Exchange Agreement, including limits as to the principal amount that can be exchanged prior to specific dates therein.

Under the Exchange Agreement, KemPharm and Deerfield also amended Deerfield’s 9.75% Senior Convertible Note (the 2014 Note) to (i) postpone the due date of the principal and interest payment originally due on June 2, 2019, to June 1, 2020; (ii) allow KemPharm to add accrued interest to principal in lieu of quarterly cash interest payments until the maturity date; and (iii) reduce the 9.75% coupon rate on the 2014 Note to 6.75% for the remainder of the term of the 2014 Note.

“Taken together, the License Agreement and the Exchange Agreement provide the opportunity to transform our financial position; we have secured a commercial partnership for our two co-lead ADHD candidates, reduced external development spending, reduced interest expense and cash interest payments,  and created the possibility of significant balance sheet improvement through potential debt reduction over the next eight months,” said LaDuane Clifton, CPA, KemPharm’s Chief Financial Officer, Secretary and Treasurer.  “The development cycle for KP415 is nearing its natural completion as we prepare to submit the NDA by the end of this year, and future development costs for KP484 will be the responsibility of the licensee.  Combined with our continuing efforts to contain general and administrative costs, KemPharm’s near-term cash requirements have been reduced, allowing us to fully support our partners and continue to develop our product candidate pipeline.”

KemPharm Enhances Pipeline with the Addition of KP922, a Prodrug of Amphetamine for the Treatment of ADHD

KP922 is KemPharm’s newly discovered prodrug of amphetamine designed for the treatment of ADHD.  KP922 offers the potential to address several prescriber and patient needs with amphetamine-based ADHD medications, including changing the overall pharmacokinetic profile and the ability to lower the abuse potential of the drug.  Developed via KemPharm’s LAT™ technology, KP922 is considered a new molecular entity and is eligible for patent protection as a novel composition of matter and may also be eligible to use the 505(b)(2) NDA pathway.

Amphetamine remains the most widely prescribed treatment regimen for ADHD with over 46 million prescriptions written in 2018, representing approximately 64% of the ADHD market in 2018.

Dr. Mickle stated, “We are extremely excited to announce the discovery of KP922, our prodrug of amphetamine, and the opportunity to potentially add this to our collaboration with GPC in the future.  Like KP415 and KP484, we believe KP922 could address several needs that are unmet by current amphetamine-based products, including changing the overall pharmacokinetic profile and lowering the abuse potential.  Additionally, the discovery of KP922 again demonstrates the potential of our LAT™ technology to allow KemPharm to develop new prodrugs that improve the properties of existing drugs by identifying pharmaceutical product opportunities where conversion to a prodrug could enable better treatment outcomes, alleviate unwanted or unintended side-effects, or enhance the marketability of the drug.”


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