Zevra Therapeutics Inc (ZVRA) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the KemPharm second-quarter 2015 corporate update conference call.

(Operator Instructions).

As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Jason Rando of Tiberend Strategic Advisors.

Please go ahead, sir.

Thank you.

And good afternoon, everyone.

And thank you all for joining our call today.

At this time I would like to remind our listeners that remarks made during this call may contain forward-looking statements that involve risks and uncertainties and are subject to changes at any time including, but not limited to statements about KemPharm's expectations regarding future operating results.

Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities law.

Information contained in the forward-looking statements is management's beliefs based on current expectations and is subject to change and actual results may differ materially from forward-looking statements.

KemPharm disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments except as required by law.

There is more complete information regarding forward-looking statements, risks and uncertainties in the reports KemPharm files with the SEC.

These documents are available on KemPharm's website at www.KemPharm.com under the Investor Relations section and we encourage you to review these documents carefully.

This afternoon Travis Mickle, President and CEO, will provide a corporate and clinical development update and LaDuane Clifton, CFO, will provide an update on KemPharm's second-quarter 2015 financial results.

We will then end today's call with a question-and-answer session.

I will now turn the call over to Travis.

Thank you, Jason.

Welcome, everyone, and I appreciate your time this afternoon and the opportunity to update you on the tremendous progress that we have made and the results that we have from one of our key clinical studies with KP201.

Just briefly for those that aren't familiar with what we do here at KemPharm, again we are a specialty pharmaceutical Company focused on the discovery and development of novel prodrugs.

The technology essentially evolves the chemical transformation of a known active or a known active ingredient API into a new prodrug which then has better or improved safety features or efficacy.

Our first product in our pipeline is a prodrug of hydrocodone referred to as KP201.

It is in combination with acetaminophen as its first commercial embodiment is anticipated to be.

It is designed to be an inherent abuse deterrent opioid product which then the rest of our pipeline kind of follows with that general tract.

Today I'm going to discuss in more detail the results of a key study that we had clinically, KP201.

A03.

This is intranasal human abuse liability study that was conducted just with KP201 itself.

So that is the active ingredient without any formulation added to that.

And that study was done in a head-to-head comparative fashion -- head-to-head with hydrocodone bitartrate, which is the active ingredient in such medications as Vicodin, Norco, Lortab and their generic equivalents.

The study was a crossover design pharmacokinetic study with the primary endpoint being the pharmacokinetic measures, as well as taking secondary endpoints related to pharmacodynamics.

The intent of the study was to ascertain the true abuse deterrent properties of KP201 and to further distinguish the molecular-based abuse deterrent approach that we have here at KemPharm versus all the other formulation-based approaches currently in development for abuse deterrence.

But as you can see from our recent press release, and I will go through it here, the study demonstrated remarkable differences in PK and PD for KP201 when compared to hydrocodone alone.

That is there was a 36% decrease in peak hydrocodone exposure from the hydrocodone that was released from KP201 versus that of just hydrocodone.

This is typically associated with the term Cmax, so there is a 36% decrease in the Cmax.

As well it took about an hour longer to reach those peak blood levels for KP201.

That would be a shift of about an hour in the Tmax scores.

The exposure as measured by AUC, especially in these early time points, was quite different.

That is in the time that it took for hydrocodone to reach peak concentration at 30 minutes the hydrocodone release from KP201 had already seen an 82% reduction in the area under the curve measures related to exposure.

By the time that KP201 reached its peak value at an hour and a half there was still a 63% reduction in the area under the curve calculation related to that same hydrocodone exposure.

Additionally, and I think very fittingly and it fits with the PK results that we have, KP201 showed a statistically significant reduction in drug liking and pupil dilation as well as demonstrating a greater difficulty in insufflation versus that of hydrocodone bitartrate alone.

Just to highlight a little bit again I think these really transformative data that we have here, this is the first study of its type in the abuse deterrent space to show that an active ingredient in immediate release form head-to-head can demonstrate measurable differences in PK without any additional formulation, really highlighting I think the vast possibilities we have with both KP201 and KemPharm's technology and our pipeline.

As well we believe that based on these differences and our recent discussions with the FDA that this data will qualify for Category 2 abuse deterrent language on its final label to which no other company or technology to date has been able to achieve.

And I will provide some time at the end again for Q&A regarding the study.

I think, again, it was tremendously positive, one great part of our growing abuse deterrent study portfolio that we plan to submit with our upcoming NDA.

Remaining for KP201 and with our other studies that we have ongoing and underway, there is the KP201.

A02 trial.

This is the second intranasal human abuse liability study.

This study is intended to measure in a similar fashion the pharmacokinetics and pharmacodynamics, but now it would be with the marketed -- the to-be-marketed formulation, the one that ultimately would be sold in the marketplace.

That study is anticipated to conclude shortly and we would be planning to announce results in this quarter as well.

Additionally, we have ongoing tamper-resistant studies and in vitro tempering studies that we also plan to announce this quarter.

Again, that would focus then getting all of our information collated together for the NDA submission which we now have nailed down more precisely into the fourth quarter of this year.

One thing that is very interesting as we continue to grow this positive data is the more positive data we have the more comfortable we feel with our NDA filing date.

But also the additional work that has to be put in to describe these wonderful results that we have so we can get the best labeling possible for that product.

I didn't mention before we are happy that we conducted our recent IPO.

With the backdrop of that IPO there was also some management realignment that we did at the top positions and we had announcement on that previously.

Rusty, our CFO in the past, has now taken the position of a Chief Business Officer.

LaDuane Clifton, who is on this call, is now our Chief Financial Officer.

And really the intent of this was to highlight, number one, the key strengths of each individual to maximize the value for KemPharm and its shareholders, as well to look strategically towards the future.

Again, Rusty will be focused on business development, investor relations as well as the strategic focus of the organization.

LaDuane will be primarily responsible for the financial operations of us going forward now as a public Company and hopefully in the future as a late stage development to commercialization organization.

I would also like to remind everybody, I mentioned before, we plan to have our intranasal human abuse liability study trials all completed with the second study and announce that data in this quarter as well as the tempering studies that we have ongoing.

Additionally, I pointed out in the fourth quarter we plan to submit our NDA, the expectation would be with that NDA filing somewhere mid-next year we would have a priority review and that would be for -- or mid-next year for a PDUFA date.

Additionally, KP511 and 415 are progressing nicely and the proof of concept studies for those two molecules are planned for the first half of next year for KP511 and the second half of next year for KP415.

So we continue to advance the pipeline looking forward to, again, the great opportunities we are seeing already with KP201 now advancing in the pipeline with a better understanding of truly what a project can bring to the table and how differentiated it is versus the current abuse deterrent technologies.

LaDuane, I would like to turn it over to you to provide a short update on the financial events of this quarter.

Thank you, Travis, and thank you, everyone, for joining the call as well.

As Travis mentioned, from a financial perspective certainly the IPO was a major event for the Company.

We had net proceeds of $59.9 million after underwriter discounts and commissions and with that well-positions our balance sheet.

As of June 30 we had $64.2 million of cash on the balance sheet and we also have $35 million remaining available under the Deerfield credit facility that has been in place since 2014.

Net loss for the three months ended June 30 was $29.8 million or $2.45 a share.

Of that $22.7 million was a fair value adjustment to our derivative and warrant liability and therefore non-cash related.

So free cash flow for the period was a use of cash of about $5.3 million.

Thank you.

Thanks, LaDuane.

Now we could open it up for any questions.

(Operator Instructions).

Tyler Van Buren, Cowen and Company.

Congratulations on the truly groundbreaking data.

Just specific with the data, the decrease in peak hydrocodone exposure is pretty straightforward as well as the AUC.

But -- and big reductions in AUC.

But was hoping to get your take on kind of the delay in the peak hydrocodone exposure by one hour.

I am assuming that that is kind of a result of the drug having to go down the back of the throat to the gut and get hydrolyzed there.

But just wanted to get your commentary on that.

And then just taking a broader step back with the guidance obtained during the May pre-NDA meeting, was hoping to get any kind of feedback that you may have gotten from the agency on the oral data as well as the category to abuse deterrent labeling which you all seem pretty confident in.

And as well as finally, when you think it makes sense to kind of really pick up strategic discussions.

Thank you.

Thank you, Tyler.

So to answer your first part of your question, yes, we believe that the delay in the Tmax of an hour is mostly related to the oral portion of this drug now running down the back of the throat and becoming an oral product at that point.

Very, very typical type of curve that we have seen, we have seen that Tmax before with all of our oral studies in that range.

But most interestingly qualitatively we do see that this is actually lower exposure at the same dose as our oral dose.

So it even appears to be less drug there than if it was taken orally.

Which would be quite remarkable and I think we will be measuring that head to head in our next intranasal study.

Can you repeat the second part of your question, please?

With respect to the guidance obtained during the May pre-NDA meeting, just wanted to maybe potentially hear any feedback on the oral data as well as with regards to Category 2 abuse deterrent labeling.

It sounds like per the guidance maybe they just required statistical significance.

So I was just hoping you'd kind of put the guidance into context now that we have the data.

Yes, absolutely.

Having the data in hand we actually did present this directly to the agency at the pre-NDA meeting and, again, showed them the study design.

It was their comment, not our question that said it should qualify for Category 2 labeling.

So they have seen the study design, they realized that there could be differences and that those differences -- as long as, again, they are outside of the bioequivalence range, that they have statistical significance, which we meet that with this particular study, we should be fine.

We have not yet had a further dialogue on the oral data, that we have to do a submission.

That is still in process and there will be a further update as soon as we have any additional thoughts around study designs and/or clarity around what we may get from a labeling perspective with the oral data that we announced this quarter as well.

Great, thanks so much.

And then the third part I believe was your strategic question.

We don't specifically comment on ongoing discussions.

I think in the past we have pointed to the NDA filing as the culmination of all the data that would be available to really have an in-depth and detailed discussion.

We always have continuing dialogues and relationships with all the people in the space, so --.

Yes, thank you.

Randall Stanicky, RBC Capital Markets.

Congratulations on the data.

This is James Chen on for Randall.

In this intranasal study, I believe there was a lactose powder arm, unless that is only in the [AL2].

But can you tell us how KP201 and the active hydrocodone performed against that arm?

And what the Emax likability scores were as well.

So this study was a PK study, so actually it was not placebo -- did not need to be placebo controlled.

So we were measuring just the active ingredients.

We used some small amount of a filler but it wasn't lactose in this particular design.

So again, there was not the placebo part of this, it is just the two active components.

The second part of your question, again, the Emax scores, the pupil dilation and the ease of snorting were all secondary endpoints which we had done without the traditional qualification and drug discrimination design that is used to validate these models.

So we did this for kind of our information.

We will be publishing the entire data set in the future, but I can tell you that there were statistically significant differences between those.

And again, for some reasons internal and confidentiality we are not disclosing those at this point.

Okay, all right, thanks.

And also the combination hydrocodone market it looks like it is starting to stabilize following the scheduling last year.

How much of the 20% volume that is left do you think may come back if there is an abuse deterrent available?

It is still a big market, but do you think those scripts are kind of lost and unlikely to come back?

No, I certainly don't and I think one thing that is ever evolving within the space is what are the value of abuse deterrent products to growing these markets as well or essentially bringing them back.

One big question that I think we have had internally we have discussed on the last call as well is whether or not to pursue a different schedule with KP201.

I think the data that we have thus far is very helpful in making us look at a different schedule here.

We will continue to gather the data and we will highlight that for the entire shareholder base and investor community as soon as we know what the best path forward would be.

Okay, got it.

So you guys haven't fully decided if you will just take the Schedule II like the class or try to get a better one, haven't decided that yet?

We haven't.

And I think the data needs to drive that decision to some degree.

The data we have right now is very, very compelling that we should push forward with that.

But it is the entirety of the data set that will make that story possible.

Got it, okay, thank you.

John Newman, Canaccord.

Congrats on the data.

Just had two questions.

The first one was when you presented the oral abuse data for KP201 there were some interesting safety findings there.

I am wondering if you saw anything similar for the intranasal study -- for the first intranasal study.

And the second question I have is -- I know that we are getting pretty close, but do you think that you might be able to present some of this information at PAINWeek?

Thanks.

So, yes, to answer the first part of your question, the AEs were very similar for this study.

The dose that we had was essentially a two tablet equivalent taken intranasally.

Hydrocodone, again, produces fairly consistent AEs of which we had similar AEs for KP201.

Again, all were mild I believe for this particular study.

With the very near-term of PAINWeek it wouldn't be possible for us to submit a detailed poster or presentation of the data.

But we are working to put together all of our clinical studies for presentation in the very near future at various pain conferences.

Great.

And then just following up on the comments that you made with regard to the scheduling.

Obviously without getting into too much detail that might be proprietary, how will you present the case or the argument to consider perhaps Schedule III to the agency as you kind of gather all this data up?

From my understanding and from our experience internally, the process by which this will be determined to be scheduled will start with the FDA and the controlled substance staff.

So again, making a logical scientific argument that head-to-head direct comparison to a Schedule II product showed consistently in abuse settings, in oral settings, in tampering settings a difference that was always improved or safer I think it will make a very logical and compelling argument.

Again, as I said, we are still formulating that with the additional data that is coming in from the other studies ongoing.

And we will give, as soon as we know what that answer is, what our future will be around that path we will let you know.

Okay, great.

Thank you.

Rohit Vanjani, Oppenheimer.

Was this study required for the NDA package?

I had it as only the oral human abuse liability study which already read out, and the KP201.

A02 study which you anticipate reading out in 3Q 2015 as well.

But was this study required for the NDA or is it more just about labeling?

Yes, this wasn't required for the submission.

We had designed it and presented it at the pre-NDA meeting as here looking at the prodrug.

We already know that abusers will do things like cold water extraction to remove hydrocodone from the combination products, the agency is aware of that.

So we were going the extra mile here to kind of look at additional things we could do for differentiation.

And looking at this study again they really felt compelled that, hey, look, if you are showing a difference of the actual prodrug head-to-head with hydrocodone, I mean that is very informative of how this drug may be misused in numerous ways outside once it gets into the market.

So they were very excited about the design and wanted to see what the data would be.

And I think that is what compelled them to even offer up that they believe that it would qualify for that Category 2 pharmacokinetic abuse deterrent language.

So, but it is only the only two studies that I mentioned that is required for the NDA then, the oral abuse and the KP201.A02 study?

The only required one was the oral study.

The A02 was, again, one of our studies used for differentiation and it was the original one that we had proposed to them.

Unfortunately whenever you propose something it seems to become a requirement as well.

So that's kind of what we have seen with A02 as well.

Okay, and then the timeline that you mentioned, I mean you said 4Q 2015 filing and then approval in mid-2016.

But if you decide to go for that C-3 designation that timeline will get pushed out, correct?

No, I don't believe so.

That shouldn't change anything from the FDA's perspective.

The downstream effect would be the DA would now have to take the schedule recommendation from the control substance staff and the FDA and determine what the final -- or adopt that schedule.

So that tends to take six to nine months and so that is where we would be looking at the potential commercial launch early in 2017.

So it is not really a delay in the approval or anything like that, it is really pushing out the potential commercial launch.

But just given the tremendous value you may get from a Schedule III that is still I think worth considering now and potentially pursuing in the future.

Could you launch in mid-2016 under a C-2 and then change it to C-3 if that designation happens?

That is another one of the factors that we are looking into.

Okay.

And then what was the percent decrease in the area under the curve for the full four hours?

The study actually went for 24 hours.

It was roughly 20% difference.

So the curve was extended out very far from the initial high that you seem to get with just hydrocodone.

And then on the oral liability trial, I think there was a trend towards -- or a trend observed of lower hypoxia, but it wasn't powered for that.

And then I think you discussed maybe looking at further studies into that.

Have you decided on anything there?

We had this question earlier, but we are putting together a data package to submit to the agency that would include some trial designs that we want to consider.

And then we would -- as soon as we get feedback we would announce what those would be and timelines for the data releases.

Okay, great.

Thanks for taking the questions.

Thanks, everyone.

Thank you.

I am showing no further questions.

I would now like to turn the call back over to Travis Mickle for any closing remarks.

Well again, I really appreciate everyone's time this afternoon, this evening.

And just looking forward to the future, this is a tremendous milestone for the organization, for the technology, extremely excited about two awesome data sets so far.

Looking forward to the A02 data upcoming, the tampering studies -- we have already seen the data internally from the studies we have done and have put in our various filings and you have seen in presentations we think that is going to be very reproducible.

And so with those two data sets looking at the NDA filing, really some tremendous milestones for the organization upcoming and we are excited to be doing this now as a publicly traded Company.

We will be hosting future calls in the future and I really again want to thank everyone for their time this afternoon.

Ladies and gentlemen, thank you for participating in today's conference.

This does conclude the program and you may all disconnect.

Everyone have a great day.