Partnership with KVK, One of the Largest Manufacturers of Controlled Substances in the U.S., Opens the Door for Commercial Launch of APADAZ with PBMs and MCOs

KemPharm to Host a Conference Call Today, Tuesday, October 30, 2018 at 4:30 p.m. ET to Discuss the Collaboration

Highlights:

• KemPharm to receive up to an estimated $3.4 million in pre-launch payments and cost reimbursements
• KemPharm has the potential to receive up to an additional $53 million in aggregate milestone payments tied to specified net sales levels
• Net profit share of up to 50% between KemPharm and KVK

CORALVILLE, Iowa, Oct. 30, 2018 (GLOBE NEWSWIRE) -- 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 with KVK Tech, Inc. for the U.S. commercial rights of its FDA-approved prodrug product, APADAZ (benzhydrocodone and acetaminophen tablets).

Under the terms of the agreement, KemPharm is eligible to receive up to an estimated $3.4 million in pre-launch payments and certain cost reimbursements, including a $2.0 million payment upon achievement of a specified milestone related to the initial formulary adoption of APADAZ, as well as an aggregate of up to $53 million in milestone payments tied to specific net sales levels.  In addition, net profits will be shared between KemPharm and KVK up to 50% based on achieving specified net sales levels. KVK has the exclusive right for all commercial, manufacturing, packaging and distribution activities for APADAZ in the U.S. and will be responsible for all regulatory and commercialization-related expenses.  In addition, certain pre-launch expenses, including the costs of API and other materials for manufacturing, validation batches, inventory investments and other launch-specific costs will be shifted from KemPharm to KVK.  Pre-launch activities that KemPharm and KVK will continue to collaborate on include outreach and plan adoption by pharmacy benefit managers (PBM’s) and managed care organizations (MCO’s) for the exclusive utilization of APADAZ as an alternative to currently available hydrocodone/acetaminophen products.

As one of the largest controlled substance manufacturers in the U.S., KVK Tech has an overall capacity to produce more than 3.5 billion tablets annually, with an active plan for expansion of capacity to produce over 15 billion tablets by 2020.  Currently, the hydrocodone/acetaminophen market represents nearly 5 billion tablets dispensed annually in the U.S. 

“Securing this agreement with KVK is an important step forward toward the commercial launch of APADAZ, a product which we believe offers a differentiated treatment option for the short-term management of acute pain,” said Travis C. Mickle, Ph.D., President and Chief Executive Officer of KemPharm. “We believe APADAZ is now well-positioned for commercial launch since this agreement puts significant manufacturing and distribution capabilities in place and opens the door to further discussions with payers regarding the utilization of APADAZ in their health plans.”

“As one would expect, KVK undertook extensive due diligence and conducted its own market research regarding KemPharm’s proposed commercial plan for APADAZ through its existing relationships with various PBM’s and MCO’s.  We both agree there appears to be a substantial market opportunity for the replacement of current hydrocodone/acetaminophen products with APADAZ,” added Mickle.  “Additionally, as a result of our collaboration, KemPharm has the opportunity to gain greater financial flexibility because of the pre-launch payments, cost-sharing, reimbursements and potential revenue stream from both sales milestones and profit share on a go-forward basis.  We are extremely pleased with this opportunity to partner with KVK for the commercial launch of APADAZ.”

“Since our founding, KVK Tech has strived to become a trusted leader in generics manufacturing and distribution,” said Anthony Tabasso, President and Chief Executive Officer of KVK Tech.  “Our business philosophy is built on a commitment to excellence with a focus on three core values:  Safety, GMP Compliance, and Productivity.  We have built a reputation of providing quality products on-time, even when other manufacturers experience supply disruptions.  APADAZ represents an excellent opportunity to provide physicians and patients with a more differentiated product than currently available on the market today, and we look forward to using our expertise, together with KemPharm, to successfully launch APADAZ.”

Aquilo Partners, L.P. served as KemPharm’s financial advisor on the transaction.

Conference Call Information:

KemPharm will host a conference call and live audio webcast with slide presentation today, Tuesday, October 30, 2018, at 4:30 p.m. ET, to discuss its collaboration with KVK.  Interested participants and investors may access the conference call by dialing either:

• (866) 395-2480 (U.S.)
• (678) 509-7538 (international)
• Conference ID: 4877247  

An audio webcast with slide presentation will be accessible via the Investor Relations section of the KemPharm website http://investors.kempharm.com/. An archive of the webcast and presentation will remain available for 90 days beginning later today, October 30, 2018, at approximately 5:30 p.m. ET.

About KemPharm:

KemPharm is a specialty pharmaceutical company focused on the discovery and development of proprietary prodrugs to treat serious medical conditions through its proprietary LAT^TM (Ligand Activated Therapy) technology.  KemPharm utilizes its proprietary LAT technology to generate improved prodrug versions of FDA-approved drugs as well as to generate prodrug versions of existing compounds that may have applications for new disease indications.  KemPharm’s product pipeline is focused on the high need areas of ADHD, pain and other central nervous system disorders, and its co-lead clinical development candidates, KP415 and KP484, are both based on a prodrug of d-methylphenidate, but with differing extended-release/effect profiles, and are intended for the treatment of ADHD.  In addition, KemPharm has received FDA approval for APADAZ^®, an immediate-release combination product containing benzhydrocodone, a prodrug of hydrocodone, and acetaminophen.  For more information on KemPharm and its pipeline of prodrug product candidates visit www.kempharm.com or connect with us on Twitter, LinkedIn, Facebook and YouTube.

About KVK:

Founded in 2004, KVK has fast become a trusted leader in generics. KVK’s business philosophy is built on a commitment to excellence with a focus on three core values:  Safety, GMP Compliance, and Productivity.  KVK focuses on sustainable growth through continuous improvement and respect for its customers, employees, and community. KVK is focused on improving the way it does business by listening to all the people who are involved in making healthcare decisions, from patients to healthcare providers.

KVK’s dedicated team is comprised of individuals with the technical, clinical and business expertise that is necessary for innovation that results in the development of a diverse range of life-changing medicines for patients of all socio-economic levels.

All of KVK’s products are made in the U.S. in a state-of-the-art facility in Newtown, PA. Currently, KVK is building a sterile injectable plant nearby and is on the verge of completing the initial fit-out of the former Lockheed-Martin complex in Newtown. KVK is committed to maintaining its entire business operations in America, and it continues to build strong, lasting relationships with the nation’s largest pharmacy chains, wholesalers and distributors.

About APADAZ:

APADAZ^® (benzhydrocodone and acetaminophen tablets) was developed from KemPharm’s proprietary LAT (Ligand Activated Therapy) technology and is intended for the short-term (no more than 14 days) management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate. APADAZ is unique among prescription opioids in that it contains a prodrug that is chemically inert, or inactive, on its own.  When ingested, enzymes in the gastrointestinal tract cleave the ligand from the prodrug (benzhydrocodone) and release the parent drug (hydrocodone), which can then exert its therapeutic effect.  The final approved product labeling for APADAZ includes these and other data points but concludes that the overall results of the clinical program did not demonstrate abuse-deterrence by current measurement standards.

The approval of APADAZ via the 505(b)(2) pathway was based in part on pharmacokinetic studies with Vicoprofen^®, Ultracet^®, and Norco^® in which APADAZ demonstrated exposure to hydrocodone and acetaminophen (APAP) that is expected to result in therapeutic effects equivalent to currently approved immediate-release hydrocodone/APAP combination products when administered orally as intended.

Indication:
APADAZ contains an opioid agonist and acetaminophen and is indicated for the short-term (no more than 14 days) management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate.

Limitations of Use:
Because of the risks of addiction, abuse, and misuse with opioids, even at recommended doses, reserve APADAZ for use in patients for whom alternative treatment options [e.g., non-opioid analgesics] have not been or are not expected tolerated, or have not provided adequate analgesia, or are not expected to provide adequate analgesia.

Important Safety Information:
APADAZ is contraindicated in patients with: significant respiratory depression; acute or severe bronchial asthma in an unmonitored setting or in absence of resuscitative equipment; known or suspected gastrointestinal obstruction, including paralytic ileus; and hypersensitivity to hydrocodone or acetaminophen.

APADAZ contains benzhydrocodone, a Schedule II controlled substance.  APADAZ can be abused and is subject to misuse, addiction, and criminal diversion.

Potential risks associated with APADAZ include addiction, abuse, and misuse, life-threatening respiratory depression, neonatal opioid withdrawal syndrome, risks of concomitant use or discontinuation of cytochrome P450 CYP3A4 inhibitors and inducers, acetaminophen hepatotoxicity risks from concomitant use with benzodiazepines or other central nervous system (CNS) depressants, risk of life-threatening respiratory depression in patients with chronic pulmonary disease or in elderly, cachectic, or debilitated patients, adrenal insufficiency, severe hypotension, serious skin reactions, risks of use in patients with increased intracranial pressure, brain tumors, head injury, or impaired consciousness, hypersensitivity/anaphylaxis, risks of use in patients with gastrointestinal conditions, risk of use in patients with seizure disorders, and withdrawal, risks of driving and operating machinery.

Potential drug interactions with APADAZ include:

• Serotonergic Drugs: Concomitant use may result in serotonin syndrome.  Discontinue APADAZ if serotonin syndrome is suspected.
• Mixed Agonist/Antagonist and Partial Agonist Opioid Analgesics: Avoid use with APADAZ because they may reduce analgesic effect of APADAZ or precipitate withdrawal symptoms.
• Monoamine Oxidase Inhibitors (MAOIs): Can potentiate the effects of hydrocodone. Avoid concomitant use in patients receiving MAOIs or within 14 days of stopping treatment with an MAOI.

Most common adverse reactions (>5%) are nausea, somnolence, vomiting, constipation, pruritus, dizziness, and headache.

The Full Prescribing Information for APADAZ contains the following Boxed Warning:

WARNING: ADDICTION, ABUSE, AND MISUSE; LIFE-THREATENING RESPIRATORY DEPRESSION; ACCIDENTAL INGESTION; NEONATAL OPIOID WITHDRAWAL SYNDROME; CYTOCHROME P450 3A4 INTERACTION; HEPATOTOXICITY; and RISKS FROM CONCOMITANT USE WITH BENZODIAZEPINES OR OTHER CNS DEPRESSANTS

Addiction, Abuse, and Misuse:
APADAZ exposes patients and other users to the risks of opioid addiction, abuse, and misuse, which can lead to overdose and death. Assess each patient’s risk prior to prescribing APADAZ and monitor all patients regularly for the development of these behaviors and conditions.

Opioid Analgesic Risk Evaluation and Mitigation Strategy (REMS):
To ensure that the benefits of opioid analgesics outweigh the risks of addiction, abuse, and misuse, the Food and Drug Administration (FDA) has required a REMS for these products. Under the requirements of the REMS, drug companies with approved opioid analgesic products must make REMS-compliant education programs available to healthcare providers. Healthcare providers are strongly encouraged to

• Complete a REMS-compliant education program,
• Counsel patients and/or their caregivers, with every prescription, on safe use, serious risks, storage, and disposal of these products,
• Emphasize to patients and their caregivers the importance of reading the Medication Guide every time it is provided by their pharmacist, and
• Consider other tools to improve patient, household, and community safety.

Life-Threatening Respiratory Depression:
Serious, life-threatening, or fatal respiratory depression may occur with use of APADAZ.  Monitor for respiratory depression, especially during initiation of APADAZ or following a dose increase.

Accidental Ingestion:
Accidental ingestion of even one dose of APADAZ, especially by children, can result in a fatal overdose of hydrocodone.

Neonatal Opioid Withdrawal Syndrome:
Prolonged use of APADAZ during pregnancy can result in neonatal opioid withdrawal syndrome, which may be life-threatening if not recognized and treated, and requires management according to protocols developed by neonatology experts.  If prolonged opioid use is required in a pregnant woman, advise the patient of the risk of neonatal opioid withdrawal syndrome and ensure that appropriate treatment will be available.

Cytochrome P450 3A4 Interaction:
The concomitant use of APADAZ with all cytochrome P450 3A4 inhibitors may result in an increase in hydrocodone plasma concentrations, which could increase or prolong adverse reactions and may cause potentially fatal respiratory depression. In addition, discontinuation of a concomitantly used cytochrome P450 3A4 inducer may result in an increase in hydrocodone plasma concentration. Monitor patients receiving APADAZ and any CYP3A4 inhibitor or inducer.

Hepatotoxicity:
APADAZ contains acetaminophen. Acetaminophen has been associated with cases of acute liver failure, at times resulting in liver transplant and death. Most of the cases of liver injury are associated with the use of acetaminophen at doses that exceed 4000 milligrams per day, and often involve more than one acetaminophen-containing product.

Risks From Concomitant Use With Benzodiazepines Or Other CNS Depressants:
Concomitant use of opioids with benzodiazepines or other CNS depressants, including alcohol, may result in profound sedation, respiratory depression, coma, and death.

• Reserve concomitant prescribing of APADAZ and benzodiazepines or other CNS depressants for use in patients for whom alternative treatment options are inadequate.
• Limit dosages and durations to the minimum required.
• Follow patients for signs and symptoms of respiratory depression and sedation.

For Important Safety Information including full prescribing information, visit: www.kempharm.com.

Caution Concerning Forward Looking Statements:

This press release may contain forward-looking statements made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “potential,” “should,” “continue” or the negative versions of those words or other comparable words.  These forward-looking statements include, without limitation, statements regarding the potential achievement of any milestones under the license and collaboration agreement, any related milestone payments, and the potential commercialization of APADAZ.  Forward-looking statements are not guarantees of future actions or performance.  These forward-looking statements are based on information currently available to KemPharm and its current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans.  Risks concerning KemPharm’s business are described in detail in KemPharm’s Annual Report on Form 10-K for the year ended December 31, 2017, and KemPharm’s other Periodic and Current Reports filed with the Securities and Exchange Commission.  KemPharm is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Source: KemPharm