KemPharm's (KMPH) CEO Travis Mickle Presents at Canaccord Genuity Annual Growth Conference (Transcript)

| About: KemPharm (KMPH)

KemPharm, Inc. (NASDAQ:KMPH)

Canaccord Genuity Annual Growth Conference

August 11, 2016 1:00 PM ET

Executives

Travis C. Mickle - President, CEO and Chairman

Analysts

John Newman - Canaccord Genuity

John Newman

Hi, good afternoon. I’m John Newman. I’m one of the biopharma analysts here at Canaccord. Welcome to day two of the 36th Annual Canaccord Growth Conference here in Boston. It’s my pleasure to introduce today the CEO of KemPharm, Travis Mickle. KemPharm is one of the leaders in abuse deterrence technology, which is a problem I think all of us are familiar with.

Travis C. Mickle

Thank you, John. And I appreciate being invited and having the opportunity to present here today. Just to begin with, for those that aren’t familiar with the organization, we are a specialty pharmaceutical company focused on the discovery and development of novel prodrugs. These prodrugs allow us essentially what is a novel approach in how to address a number of different issues; but primarily, when we look at our prodrugs we see two great opportunities, the ability to use the 505(b)(2) pathway in order to decrease the risk of regulatory development, as well as the timeline and investment necessary; as well as, because we generated a new molecule from our discovery process, we actually get a novel composition-of-matter based patent. So, we kind of get the opportunity to have our cake and eat it too; decreased risk that you might see with a formulation, and increased exclusivity due to the composition-of-matter based patent.

We have a pipeline of different products and I will touch on a number of those today. Very simply, in the cartoon fashion, our technology takes an existing, approved FDA product, we attach to it what we refer to as a ligand, this new molecule will impart the benefits that we’re intending to design it for. So, in the case of our pain franchise, we focused on abuse-deterrence as the major attribute that we would like to impart. Once that prodrug is administered as directed, or as intended the prodrug breaks down through natural metabolic processes and you get back the known active ingredient. So, in the case of our first product out was a prodrug of hydrocodone. So you get hydrocodone back from that, and so, it’s able to impart its therapeutic benefit, but hopefully doing it in a much safer manner than the previous product.

We’re working across therapeutic areas, so John mentioned our focus in abuse deterrence. Now we do have a product as well that’s in the ADHD space, and which we think is very interesting. That’s more of a patient-focused product.

Just generally, abuse-deterrence in the past, and until OxyContin was able to show a difference in the tamper-resistant formulations, really there was no barrier to just taking a product, crushing it, snorting it, and injecting it or swallowing it whole for the traditional opioids. And this is still the vast majority of the opioids that are on today’s markets that fall in the traditional opioid space. There’s no tamper-resistant features, no abuse-deterrent features whatsoever. With the introduction of OxyContin in a number of formulation-based approaches, there’s at least a couple of barriers that are put in front of an abuser. And these barriers are typically found as physical, chemical barriers. So, you can’t extract it, you can’t crush it. It takes a little bit longer to access the free opioid.

In the case of KemPharm’s approach to abuse deterrence, it’s different. It’s now abuse deterrence at the molecular level. So, now you must, in order to get access to the opioid itself, really the best and only way to do that is just to take it as intended because every other route, whether it’s in vitro in a lab dish, or in vivo through an alternate route of abuse, does not provide the same incentive to an abuser that you would see with the free opioid.

Some recent developments and regulatory highlights I’d like to touch on; we did receive a complete response letter from the FDA back in June for our lead product Apadaz. We have had a very productive end-of-review meeting, which I’ll hit on here in a little bit on that particular product. We actually were able to report very favorable results for our second product in line, which is KP511. It’s a prodrug of hydromorphone. It had a positive phase one proof-of-concept trial, so we’re advancing that product into human abuse liability studies this year. And we also had a number of key regulatory meetings with the FDA on both KP201/IR, which is our product that does not have acetaminophen, as well as out ADHD product, KP415.

The End-of-Review meeting with the FDA, again, this is in response to a complete response letter. We want to know as much as humanly possible from the FDA why they issued the response letter. I think I can go through this in detail, but I think I’ll just get right to the point. In this particular case there was no debate on the safety or efficacy of Apadaz as a product that could potentially be approved. The debate was, between the division and the company, on what sort of abuse-deterrent language to go on to the label.

So, we now know after the end-of-review meeting that essentially the metrics that are probably most relevant for extended release products, which are drug liking, take drug again and high are not metrics that we can particularly hit because we’re an IR product, but those are the ones that the agency’s most focused on. And if you don’t make those endpoints, well, you don’t get abuse-deterrent language. And I think that’s right now where we are. And where the next steps will be we’re still assessing from after the End-of-Review meeting what we want to do with Apadaz and where we believe we can go. And we will actually work with the division and the agency on how to move this particular product forward. We were actually very encouraged by the meeting and felt it was very productive, and believe there is a path forward to where we can resolve this dispute. It’s just that we don’t have a determined timeline at this point.

So, as I spent a fair amount of time on the product Apadaz, here as our lead product now in a post-review setting, whether that be a formal or informal appeal process. After that, KP511, KP201/IR, both of these will be advancing very quickly through clinical studies and we’ll be providing additional guidance as to when we expect to file the NDAs for these particular products. Later this year we do expect to have as well proof-of-concept data for ADHD product KP415. Many of the individuals in the organization that were involved with the discovery and development of the product Vyvanse are now at KemPharm, and we’re extremely excited about the potential of this product. We’re seeing the same properties that we saw with Vyvanse, now in a methylphenidate form.

So, moving on. Just looking at out KP201/IR. This is a product that we are developing now without acetaminophen. It’d be the first and only single entity product without acetaminophen in the hydrocodone space. And potentially the first without acetaminophen - with abuse-deterrent properties. We’ve already conducted a number of studies, which I’ll cover in a second, that have already shown that this is going to be a very successful product. The nice thing about our patents here too is they’re long lived. Composition-of-matter for this particular product, as well as Apadaz, runs until 2031.

So, the results of the particular study I was referring to are demonstrated here. When we gave the product Apadaz, and in this case it’s the intact prodrug benzhydrocodone or KP201, intranasally to those that had experience with recreational drug abuse, what you saw was a considerable difference in the pharmacokinetics of the released hydrocodone from that prodrug. Now, compared to just hydrocodone there was a significant delay, as well as a significant reduction in Cmax and a delay to Tmax.

That also led to a lowering of Drug Liking. That was one of the critical scores that the FDA has told us that they’re looking -- that need to be met for labeling. We’ve already hit those critical endpoints with this particular product. So, again, the bar here for getting a product with abuse-deterrent language on its label we think is much lower with KP201/IR than it would be otherwise without this data.

KP511 is our extended release formulation of our prodrug KP511, which is a hydromorphone. In our initial studies what we’ve seen is an immediate release profile, so we’re actually going to intend to add in another layer of protection here with an extended release technology. We’ve seen significant reductions in abuse liability, as well as the ability to perhaps address respiratory depression or overdose. And I’ll highlight that in a second. Again, composition-of-matter based patents have all issued and they run until 2032 for this product.

This particular market is a little bit smaller than say the opportunity you would have with a Vicodin combination product, but we still think it’s a great opportunity for a product like KP511. These particular spaces have been focused more on severe pain. Again, if you can anticipate a safety benefit with a particular product, there may be the ability to expand outside of just those individual patients that are in severe pain.

Results of our KP511 study 101 showed a release of hydromorphone from the prodrug that was nearly equivalent at all doses. We actually saw the exact same data from our animal studies, there was a slight decrease in Cmax. When we put this into an extended-release formulation we anticipate to be able to maintain a bioequivalent release from the prodrug with KP511. When administered to animals, we actually saw intranasally and intravenously a significant reduction in the amount of released hydromorphone from the prodrug.

We believe this is again, part of the benefit of having this type of technology is even if somebody’s able to extract out our particular prodrug from a formulation, or be able to get just the [neat][ph] drug itself, that’s where the protection is. So, for many of the other products that have been approved, the six that have been approved to date, they all have weaknesses because it essentially at the end of the day, if you can extract out the active ingredient it’s just as abusable as all the other products out there. In this particular case, there’s another layer or two of protection involved with the prodrug.

In this study -- this is what I was referring to when you talk about overdose protection -- we actually dosed the animals with hydromorphone there in the blue up to about 14 milligrams per kilogram. After that, every single one of the animals died in the study, so we had to just extrapolate what a liner curve would look like if we continued on to be able to dose. What we saw with KP511 was quite remarkable. We actually were able to go above 64 milligrams per kilogram and didn’t see any of the animals die in this particular study. So, what we see here from the curves that are generated is not just a delay in the extent or in the amount of drug that’s released, but you also see a delay in the rate. So we believe that’s part of the safety benefit -- it takes a little longer and it doesn’t release as much. That gives the rat, and hopefully, a human, the ability to acclimate to the drug, and thus you get the safety benefit of potentially reducing respiratory depression or overdose.

Our IND application for 511 was accepted back in March. We have our positive proof-of-concept study that was just completed and now we’re initiating our human abuse liability studies in this space. And those are going to be the critical efficacy endpoints that you’re really looking at, whether it be for tamper resistance, intranasal, IV abuse, as well as this ability to limit oral abuse or an overdose.

Another unique attribute of KP511 that we’ve seen preclinically is we don’t have the same response preclincially to opioid induced constipation. So, hydromorphone is a very potent opioid. It causes a complete shutdown of the GI tract in our animal models and we didn’t have the same response; we had the reduction in the opioid induced constipation. So it is part of our clinical development plan right now to investigate this particular effect. One could imagine abuse-deterrent hydromorphone with overdose protection and perhaps a reduction in OIC as being quite groundbreaking in the space of opioids.

A little bit of change of thought here now, focused on KP415, our prodrug of methylphenidate. Again, the attributes that we’re thinking about for this particular product are a little bit different. I think here abuse deterrence is a nice to have, it’s not a must have, and we do see abuse-deterrent properties with this particular prodrug. Really the focus of our drug discovery effort was to find a methylphenidate version of Vyvanse. So, Vyvanse is a prodrug of amphetamine. It’s something that's well understood. It’s the market share leader in ADHD. So, we wanted to see can we bring the same benefits to the methylphenidate market. We know that stimulants are the vast majority of the prescription market in this space and really are the gold standard. They do have the most efficacious properties. But, there are a number of patients who can’t switch between amphetamine and methylphenidate. So they can’t switch over to the Vyvanse products and so they’ve been left out kind of without the benefit of having what Vyvanse brings to the table.

And there’s really three things that we’re focused on. One is a controlled release profile that’s very reliable. For treatment of ADHD, that’s very important. If you can’t control it throughout the course of the day and be able to predict when it will come on and when it will come off and not have to worry about diet and exercise and in between all of that. That’s a very powerful sell for an ADHD product. And that’s one of our main goals here: to design a product that can provide a very reliable therapy over the course of the entire day for the patient.

As you can see here in this particular slide, KP415 actually did demonstrate, compared to dextro-methylphenidate, an extended release profile that was about three times as much the Tmax than it was for the immediate-release comparator, a very similar relationship that we saw with the product Vyvanse when we were developing it preclinically.

Reduced abuse potential, again, if you take the drug and you administer it intranasally or intravenously, you actually never see more exposure to the drug than you did orally. So, if you go back, here the peak concentration is about 15 nanograms per ml for the methylphenidate released from the prodrug. And if you go here again, you've got 70 if you happen to take it intravenously. There’d be no incentive for an abuser to want to abuse it through these routes of abuse because they’re not getting any greater exposure or faster exposure to the released methylphenidate.

We have completed our pre-IND meetings with the FDA. That went very well. We’re right on track to file our IND by the end of the year or the second half of this year. And we actually expect to have results from our proof-of-concept study by the end of the year. So once these products kind of get through the initial barrier of filing an IND, they can move very quickly through different data milestones and provide a lot of meaningful data quickly. These are expected near-term milestones for the three programs that I’ve highlighted here today. Again, all by the end of year. We expect to initiate the intranasal study with KP511. We have two IND filings and another proof-of-concept study.

So, last, but not least, KemPharm’s in a nice position. We’ve had a little bit of near term turbulence with the Apadaz CRL and End-of-Review meeting. We’ll have to work through that with the FDA. But we are well positioned with cash. As of the end of June, we had about a $102 million in cash. We burned somewhere between seven and ten million in cash per quarter, on average. We don’t expect that to change or increase, even with all the different products that we’re developing in parallel. So, you can then decide how long cash will last for the organization. Actually, I’m going to be able to end my presentation early and provide some time for some questions.

Question-and-Answer Session

Q - John Newman

A question over here.

Unidentified Analyst

What makes you think that KP511 can have a different labeling than one that was turned down by the FDA?

Travis C. Mickle

So in the case of the product that was recently we had the CRL with, there were a lot of differences from the milestones that the FDA feels are most relevant and what the product attributes were. So, while we thought - we still believe we have strong data to suggest that it should be abuse-deterrent, that data doesn't match exactly what the agency expects to see. So, that difference has caused that problem with that particular product. We don't have the same problem with our other pipeline products. These were all designed to, you know, hit the goals pretty steady on. Again, we know what we have to hit with these particular products, and that's what their design is. Most of the trouble with the differences that we saw with the first product was related to the acetaminophen. So if you take a lot of the drug and you snort it intranasally, you actually get a lot of it to go down the throat. So our main argument is, well, there is no incentive to abuse it intranasally because you don't get any different exposure than if you would have swallowed it. But that didn't change the endpoints that the agency really - said that doesn't matter, we only looking at endpoints, not when the end points occur.

Unidentified Analyst

Are you more optimistic?

Travis C. Mickle

We're very optimistic about our pipeline products I think because we have already seen differences that were dramatically different than the comparator. I think with the acetaminophen it made the differences very subtle. And subtle differences, to the FDA, don't exist.

Unidentified Analyst

You referenced a couple of times that you thought that you would be able to move through clinical trials pretty quickly. Why is that the case, and what is the make-up of your clinical trials, typically?

Travis C. Mickle

Most of the cases, we're going to rely pretty heavily on bioequivalence; so, once we hit that bioequivalence, we know we don't have to do efficacy studies, or we're not trying to measure anything that's a lengthy clinical study. So, a lot of pharmacokinetic studies, and these typical abuse liability studies, the one that I showed before, KP201, that we’ve already completed, this study was done, start to finish, in about three months. So, the results from this study, you know, it doesn't take long for many of these to enroll and get moving. So, you can do them progressively, you can do them in parallel, and that's really the benefit here. We know what the comparator drug does, so we can design a lot of our studies in parallel with the rest of the development.

Unidentified Analyst

That's [right repair the bridge] [ph].

Travis C. Mickle

That is. Yeah, many times we don't even have to do an efficacy study. So, in the case of 415, we intend to, because the benefit is for the patient, and we want to show a better efficacy and longer duration efficacy, but for a product like 511 and 201/IR, there we may not have to do as much.

John Newman

Additional questions?

Unidentified Analyst

[Indiscernible] management directly buy some stock [indiscernible]?

Travis C. Mickle

Yeah, I believe we've been in a lockup for a while so I don't think it's been very recently, but I know I did last time the blackout period was lifted, and I know some folks have, as well.

John Newman

Maybe, one question from me, which is, you talked about the development going forward for 511. Just wondering if you could talk about what we might see this year in terms of the ER formulation, and also you talked about starting the human-abuse liability study intranasally. Can you remind us, will those studies be conducted with the IR version, or would that be something you would also look at with an ER version?

Travis C. Mickle

So, I'll go backwards and start answering your question from the end because I can only remember the last thing you said first, so I'll ask you to remind me what the first part was. In this particular case, we do plan to study both the properties of the prodrug and our final to be marketed formulation. We intend to do both, because I think that's an important component here -- that people need to understand -- to really know what the full value of the product is. The FDA, they are going to expect us to do all of our studies with our to-be-marketed product, and so we will meet all of those expectations. The study we plan to start first is just with the API itself. So, just KP511 against hydromorphone. What is the pharmacokinetic relationship? Is it better than what we saw with KP201 when it was just alone, or is it worse? What is the likelihood of success when we actually formulate this into an ER product?

John Newman

The other questions are really what we should expect to see, say, this year, early next year, in terms of the ER formulation work?

Travis C. Mickle

Yeah, I think we have been debating and looking at different technologies. We are currently looking at a couple of different approaches that we can use, one of which is already initiated. Again, many times, other folks in this space want to develop their own product, so there's not a wealth of technologies available, if you just want to add something additional.

But what you can expect is whatever approach that we use is going to have its own abuse deterrent properties as well, because I think that here is going to be the benefit; you have what the formulation can do, which is meaningful, and has been demonstrated to be effective, what a prodrug can do, and you get the one and one equals three scenario, where you can have the full benefit of this new formulation.

John Newman

And, just in terms of the potential for overdose protection, can you talk about whether any of the existing products on the market today that are abuse-deterrent have any ability to address overdose by mouth?

Travis C. Mickle

Yeah, right now there is no technology that can address overdose -- whether, through any route, honestly. That's something that is a unique feature of the opioid, you know, the fact that it decreases the rate of respiration, and eventually can lead to death. We've already seen in one of our studies that we've conducted with Apadaz, during its clinical development. At very high doses, you actually get a reduction in exposure that led to a safety signal that said, "you may have less respiratory depression". So, we're investigating that -- I've said that in the past. We are investigating that with KP201. I think the fact that we didn't see it in the preclinical model and seen it in the clinic is very helpful for us to understand that can really be a real thing with KP511. We've seen a dramatic difference already in animals. It may even be more dramatic when you get to humans.

John Newman

Okay, great, thanks very much, Travis.

Travis C. Mickle

Thanks.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!