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KemPharm: What Now After FDA Approval?


  • The stock of KemPharm has been on the move since the FDA approved Apadaz, an opioid painkiller for short-term acute pain management on February 23rd.
  • This was a nice win for the company as its primary drug candidate continues to progress in development.
  • So what is ahead for KemPharm?  We try to answer that question in the paragraphs below.

None are more hopelessly enslaved than those who falsely believe they are free.
―von Goethe

Today we take a look at Busted IPO KemPharm (KMPH), which has been on the move since the FDA approved its compound Apadaz, an opioid painkiller for short-term acute pain management, on February 23. What is ahead for this now Tier 3 concern? We take a more detailed look in the paragraphs below.

Company Overview:

KemPharm is an Iowa-based biotech focused on the discovery and development of prodrugs which build on attributes of approved treatments. Improvements made include such areas how easily the drug is abused, safety profile and bioavailability. This is accomplished by attaching one or more molecules to the FDA-approved parent drug which when administered separate from the prodrug and release the the parent drug to exert its therapeutic effect. An advantage of this approach is that it has lower risk and a shorter time horizon than traditional drug development due to the active ingredient of each drug candidate possessing a known safety profile (further safety studies are typically not necessary). Large, established market opportunities in pain, attention deficit hyperactivity disorder and other central nervous system indications are being targeted. The company has just surpassed a $100 million market capitalization and trades just over $7.00 a share.

Source: Company Presentation

Several members of management hail from New River Pharmaceuticals (acquired by Shire for $2.6 billion), where they worked on Vyvanse. The treatment was a new type of amphetamine-based drug which could help control patient abuse and help replace revenue lost from Adderall XR after its patent expired.


The company´s LAT (Ligand Activated Therapy) platform technology has allowed them to create a varied pipeline with plenty of potential.

Source: Company Presentation

Their lead candidate is KP415, an extended-release prodrug of methylphenidate (MPH) for the treatment of

This article was written by

Busted IPO Forum profile picture

The Busted IPO Forum founded by Bret Jensen, focuses on stocks that have been public for 18 months to six years that are significantly under their offering price, AKA Busted IPOs.  Many times, after the initial analyst hyperbole has died and insider stock lockups have expired, these same companies can be had for .30 to .50 cents on the dollar from when the shares went public. 

• • •

Specializing in profiling high beta sectors, Bret Jensen founded and also manages The Biotech Forum, The Insiders Forum, and the Busted IPO Forum model portfolios. Finding “gems” in the biotech and small-cap stock sectors, these highly volatile spaces proven hugely successful have empowered Bret Jensen's own investing portfolio.

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Analyst’s Disclosure: I am/we are long KMPH, NEOS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (27)

loblolly6 profile picture
Thank’s Ken. Appreciate your insight.. Analyst I follow has a PT of 12. Still waiting on partnership announcement which when it comes may add a point or so. Hence I may not wait
Agamemnus profile picture
You think a partnership will add a point? Well, I guess that is what makes a market...
loblolly6 profile picture
That will provide cash flow and give marketing expertise. Depending on terms, yes I do. I take it you are not so inclined? What do you think the read out KP415 bring?
Kenneth Pittman profile picture
Personally I could see a partnership taking it anywhere from 6 to 10 depending on the terms of the partnership. I think the most likely is somewhere in the middle, so I could agree with a move to 8 as an expectation.
Bret Jensen profile picture
Thinly traded nano cap KemPharm (NASDAQ:KMPH) is up 6% premarket, albeit on only 280 shares, on the heels of its announcement of topline data from an ongoing pharmacokinetic (PK) study of KP415 in pediatric and adolescent patients with attention-deficit/hype... disorder (ADHD).
The company says oral administration of KP415 resulted in predictable exposure to the active ingredient d-methylphenidate which it says may allow for a single efficacy study in the classroom ADHD trial design in pediatrics without "pediatric only" labeling.
Topline results from the ongoing pivotal study KP415.E01 should be available mid-year.
Kenneth Pittman profile picture
Today's news was pretty much a given in my mind, but I won't complain if it gives the company a little attention and leads to a run-up in the price. It's been my best bullish call since DVAX.
loblolly6 profile picture
Yep...it’s been good to me too..still a buyer?
Kenneth Pittman profile picture
I bought more at 6. If it settles a bit I'd consider adding more around where it is now.
Briber profile picture
Like the Cohen quote, kinda fits Trump doesn't it?
stop bringing politics into everything guy. totally and utterly irrelevant to this article about a great growing company.
Busted IPO Forum profile picture
Amen. Not like other candidate was any saint............and nice to see economy finally break out from 'structural stagnation' and 'structural unemployment' after a decade.
Faa Faa profile picture
second that realization.
Kenneth Pittman profile picture
Also - with regards to the NEOS comparison (which I think is a good barometer) - NEOS is further along and much closer to profitability, but Kempharm has the higher ceiling at the moment. KP-415 and KP-484 could reach sales that are several times what Adzenys/Cotempla will reach (and I like Cotempla in particular). KP-415 will be the most significant development in Methylphenidates since Quillivant and maybe even since Concerta. It's not perfect, but it has some properties that are very favorable.
Faa Faa profile picture
market and traders are valuing either Apadaz at zero or their ADHD compounds at zero. Both will have a lot of long term unrealized value...
Kenneth Pittman profile picture
I've been here since $3.80, added after Apadaz approval (significant derisking) around $6, and would potentially add more if it pulled back more. Major issue here is how they handle the marketing / partnering of Apadaz given their current debt. If not for the debt issue, then this would be much higher.
Agamemnus profile picture
They aren't going to spend any money marketing Apadaz: http://bit.ly/2GiruMc.
Kenneth Pittman profile picture
Yeah - I realize that and worded what I said carefully in light of that. Their strategy may be genius and work well - it may also result in slower revenues. Until we know the structure of whatever deal they come up with (and especially how that deal relates to their debt) then it's a big unknown holding many investors back. I think Apadaz approval was a significant derisking, but addressing the debt would derisk things even further. If they could somehow manage to get an upfront payment out of any marketing/partnership deal (not just royalty), then they could address debt with it.
Agamemnus profile picture
I do not think there will be an upfront payment. It's not needed.

What's more important is the substitution terms. For example, let's say they do a deal with Express Scripts. That's instantly 24% of the market of 5B pills (at 20-30c each?) if they can put Apadaz as the prime generic. Now, Express Scripts is much bigger and more influential when in combo with Cigna, so that was a big plus for a potential deal, and hence a good rationale for the stock going up on Thursday.

Aggressively marketing abuse-deterrent (or abuse-deterrent lite) opioid drugs at high prices has been a disaster for any company that tried it -- just look at EGLT. KemPharm's strategy makes sense and imo will be incredibly profitable. The deal will tell all.
Faa Faa profile picture
impatient traders in this stock on a big up day for the markets....

13$ PT is pretty low with news coming in a number of areas...
loblolly6 profile picture
Up big yesterday.... down big today... trader mentality going on. Interesting to see if it recovers a bit..
Kenneth Pittman profile picture
Kempharm trades on a pretty low float and volume. Therefore it tends to have more dramatic swings in price.
Agamemnus profile picture
Not too sure about that. The stock barely moves. It's not volatile at all, or hasn't been, mostly, for the past 2 years. Thursday, a lot of stocks moved up similarly as a response to the Express Scripts acquisition. Sadly, some of them (including KMPH) fell right back down on Friday, but some stayed up.
Kenneth Pittman profile picture
By dramatic swings I meant it is not unusual for it to move 20-30 cents in with just a few buys or sells. Increased volume in a short amount of time (especially if its heavily tilted towards buying or selling) can result in a more dramatic move (which was seen Thursday and Friday). Thursday it was all buy volume and then there was some profit taking Friday on lower volume (but still higher than average for 6 months). Volume has improved significantly in the last 3 weeks. Volume was consistently low for most of late September through December (when the stock didn't move much at all). It started picking up in January on the buy side especially.
Agamemnus profile picture
Well..... you didn't actually write about Apadaz except for that quote... Although OK, a blurb about the ADHD and rare disease partnership...

P.S. All the graphics are blurry.
Faa Faa profile picture
i agree --- there is no commentary here that is actually original and nothing at all on Apadaz in terms of market size, valuation, etc.
Agamemnus profile picture
Anyone there?...
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