Q3 2022 KemPharm Inc Earnings Call
Yeah.
Good afternoon, and welcome to the Chem pharma third quarter 2022, corporate and financial results Conference call.
Currently all colors have been placed in listen only mode and following management's prepared remarks, the call will be opened up for questions.
If you would like to ask a question at that time. Please press star one on your telephone keypad.
You need to remove yourself from the queue Press Star Q.
At any time, if you should need operator assistance press Star zero.
Please be advised that today's call is being recorded.
I will now turn the call over to Nicole <unk>, Ken <unk>, Vice President Investor Relations and corporate communications.
Ma'am you may begin.
Good afternoon, and thank you for joining our call today.
Scott Kim farms third quarter, 2022 financial and corporate results.
<unk>, we begin 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 <unk> expectations regarding future operating results.
Forward looking statements are made pursuant to the safe Harbor provision of the federal Securities law and represent management's current expectation.
<unk> results may differ materially Chem pharma disclaims any obligation to update or revise its forward looking statements, except as required by law.
Information regarding forward looking statements risks and uncertainties can be found in <unk> filings with the SEC, which are available on <unk> website under the Investor Relations section.
Speaking on today's call will be Travis Mickle <unk> President.
And with one question.
Oh.
Following the remarks, Travis Duane will participate in a question and answer session.
With that it's my pleasure to introduce Travis.
Thanks, Nicole and thanks, everyone for joining today.
Excuse me.
Those are not as familiar with Kevin Barton I would like to give just a brief introductory statement.
<unk> is focused on the development and discovery of novel rare CNS and Neurodegenerative disorders, as well as license almost storage diseases.
While historically, we have a number of other assets that have been licensed or new focus is on the development.
Potential products that we can internally commercialized.
That's all built on a foundation of strong science as well as good.
Foundation of our financial.
Uh huh.
Excuse me.
Yeah.
Okay.
Sure.
A little bit of allergies that have caught up with me. So a strong balance sheet next slide please.
Just to go over briefly the recent highlights.
From the press release and results from the Q3.
There is a number of different things going on with earmark rimmel and many of these we have not continuously updated.
As a highlight we recently had the completion.
The four year open label safety trial for remarkable demonstrating.
Demonstrating the long term effect as well as safety of earmark them all of that time period.
We've been having ongoing collaborative dialogue with the FDA. This includes meeting submissions back and forth with questions and answers and so forth. So very collaborative discussion there and we've been working to bring in all the new data as well as some of the other data that we werent expecting to have to add two to the end.
Based on all of that we're now targeting the resubmission.
Early as Q3 of next year.
<unk> continues to generate sales and milestones.
The potential for the royalty revenue with the stores.
Corium is continuing their effort there.
<unk> seven development program is going well, where you just announced results for the phase one cardiovascular trial.
Certainly very positive results for us, indicating we're right on the right track, we want to be with that particular program in development.
And then with that we do expect to initiate the phase II trial before year end.
And then as Loraine will highlight a little bit in more detail. We do have a strong balance sheet. We had revenue from the French EAP as we expected as well as other forms of revenue.
And have ample capital to do everything that we expect to do and perhaps a lot more.
So specifically looking at the various product development highlights.
Just a brief overview of our Markham all her medical mall.
For the treatment of Niemann pick type C. This is an ultra rare lysosomal storage disorders, most of the side effects being that related to neurological symptoms.
Related to cognition hearing loss.
Each swallowing et cetera.
We were able to acquire the product after a CRM and some financial difficulty of the former sponsor or <unk>.
Are you able to get it for a highly efficient sort of structure. We see this as a high value opportunity for us not only something that already generates revenue through differentiation.
But to really considerably advanced the company into the commercial stage of these rare disorders. So with that the intended resubmission in the third quarter will help to advance those those schools.
Next slide please.
Okay.
So looking at the path to Resubmission as I mentioned in there briefly we are continuing to have this dialogue with the FDA against submission of some of these studies that were completed prior to.
Prior to are actually getting the asset, but since the CRM has been a part of this entire process and this really I do believe shows the interaction with the agency has been very collaborative and for them wanting to see an advancement here.
We're also working to bolster the arguments that were made in the original NDA as well as specifically addressing each of the CRM issues.
With that.
Something that we were not aware of was that the four year safety trial was wrapping up and then that database will be locked and in fact the.
Final report will be issued knowing all of that it wouldn't make any sense for us to submit that day.
Data.
That entire study.
Cynthia NDA associated with that without that data in there we think its very strong data very supportive of our.
Potential safety and efficacy for the product. So it's certainly something that we feel is the critical piece.
And looking forward I think one question that everybody should have on their mind, we see this potential delay from our previous guidance is what else is the FDA said.
And the FDA has not raised any new issues or concerns it's been really about reviewing what they didn't know.
From the previous filings as well as what has been generated since then and Theres been no request for any new efficacy trial from the FDA very critical piece here no new issues than what we've already identified.
As well as no new efficacy trial.
We still believe that Theres, a very viable path, but there will always be the possibility in any regulatory.
Uh huh.
Any regulatory submission like this that we may choose to some additional work we may choose to go through an appeal process as well as request either by the FDA are buying Tim farm and <unk>.
<unk> for an AD com.
For this particular product.
Briefly looking at <unk> 77.
This product is actually intended for the treatment of idiopathic hypersomnia as well as narcolepsy hits, 100% of sphere, Dexmethylphenidate, which is a prodrug of methylphenidate.
Already been designated as a.
<unk> four.
Classification as far as controlled substance.
This is also an orphan disease a rare disease.
Pathic hypersomnia actually crushed less in narcolepsy.
Our intended benefit here is that we can provide higher exposure providing more waking through.
A potential pathway that addresses the major symptoms.
H, including sleep inertia or awakening as well as brain fog.
Looking at where we sit and what next stages are.
For idiopathic hypersomnia this as our lead indication we filed an IND earlier. This year, we expect to initiate our phase two trial before the end of the year everything seems to be going well there.
<unk> enrolling getting up to speed starting to look forward to recruitment and so forth. We expect to have interim data from that phase II trial by roughly mid year next year, we'll provide more detail on to that as well as top line data before year end.
Of next year.
After we get that study underway and perhaps even after interim data we will initiate the second study and this time in narcolepsy.
That particular case, we're looking at the add on Densification and known as our primary commercial.
And development program.
So I think that gives us an update on both of our development programs as well as for the status of the company is overall and I'm going to actually turn it over to Duane to provide some more details on the financial position.
Thanks Travis.
As Travis mentioned earlier in his opening remarks.
We had another positive quarter, a good quarter and specifically our balance sheet remains very strong.
Revenue recorded for this quarter is $2 $9 million, which is net.
Net certain liabilities associated with their remarkable EAP program.
<unk> does come in as we expected.
Our net loss for the quarter was about <unk> 19 per basic and diluted share, which was driven primarily by R&D expense and G&A expense, but again offset by the net revenues.
As of June as of September 30, our cash balance was $107 4 million.
That's a decrease of about $7 million compared to the prior quarter.
That really was comprised of sort of the ongoing third party R&D costs as well as other expenses and notably.
Investment in working capital related to differentiate program. So you will see on our balance sheet.
There was an increase in accounts receivable.
And so as we move forward, we do expect that cash flow to begin operating in the normal course.
Ultimately.
Our cash balance based on our current operating forecast allows our resources to extend our runway into 2026.
And as also as Travis has mentioned to the extent that stores.
Generates royalty revenue or additional milestones, which we still see is pretty much an important thing to be looking for.
That will have the effect of potentially extending that runway further.
Thank you Travis back to you.
Thanks for doing so just looking forward as we are.
<unk> and review the upcoming milestones.
We reiterate our intention to re file the NDA.
Q3 of next year anticipate of course, the quarterly revenue from the French EAP program.
<unk> will continue to monitor scripts and see how that goes.
Think that those are certainly tracking in the right direction for K P. 10, 77, because the expectation for the trial to start by the end of the year interim results should be available mid year with those particular final results by the year end.
As well as the initiation of the narcolepsy trial sometime in 2023.
And then if we're going to highlight it again.
Solid balance sheet, a lot of good possible expansion opportunities not just with our pipeline, but through what we already have in Aramark Kimmel, and <unk> 77, and certainly a long runway.
That can only be bolstered by additional revenue.
So with that I'm actually going to turn it over and see if there's any questions.
Thank you Sir.
And at this time, we will open the floor for questions.
If you wish to ask a question. Please press star one on your telephone keypad.
Remove yourself from the queue by pressing star Q.
Our first question will come from two months' Kulkarni with Canaccord. Your line is open.
Good afternoon. Thanks for taking my questions I have a bunch here, so I'll start with one it.
It looks like at this time, you don't have any new requests from the FDA.
Has the agency already finished reviewing the new data that you've generated if not when do you think the FDA could finish that and how confident are you that the FDA analysis with Barclays.
Good morning.
I mean, it's an ongoing sort of review so we have submitted.
Give particular details, but whatever we've submitted to the agency they fully reviewed.
There will be a detailed review post submission I mean, that's just standard course, but they've already asked questions and weighed in.
Some of the information that has not had totality of that information, where we could we could actually file the NDA if it were.
We have more to provide them as well as more to put it into the NDA that they won't be able to review until then so I hope that answers your question.
And then it seems like the safety study is the new piece of information that is the key thing that led you to this potential like they believe the potential filing.
Were there any specific findings in the safety study that you might consider content Youtube and then if the safety data that's already publicly known about a month to month and is there any risk related to continuation of the EAP program for the product based on the new safety data.
I mean, the that particular study and the results it actually did as well measure the NPC CSS.
Efficacy score was continuously measured as well.
Actually showed a lawn.
The lasting effect of Aramark rimmel, and those patients who were in the study which would have been not just 40 years with five years in total.
Additionally, there were no safety signals that were different than there was in the double blinded phase of the trial.
I think the data is great it's already been presented.
By Mark Patterson at.
To MPC.
Our conferences, including the prestige and conference.
The contracts back in July so those results are already out there certainly we can put those up on our website.
At some point here I think they are helpful. I think theres also results of the two failed trials or consignment attempted with AOS and IBM.
That show.
The safety here 500, plus patients Theres been no significant.
Safety signal.
From Iraq the mall.
And all of that and that's that's pretty.
Where to have in this type of disease that level of safety and that many patients exposed for a long period of time.
Okay, and then one more before I hop back into the queue.
Can you give us any details on what specific parts of the proposed NDA package will be most in need of strengthening that make the switch over to the timeline that would you say that the pain that is conservative.
The information needed to be debated.
Yes, I would say, it's conservative I think.
<unk>.
The difference between.
March.
In March and July .
Is Q1 to Q3 right so.
Certainly have to indicate a six or nine month delay.
From those sort of things, but when we looked at what needed to be bolstered.
There was nothing I mean, we really had all of the data it's all about putting it together and then what has kind of led to this is the safety trial.
It wasn't something we anticipated putting into the submission. So that has to go in and we really do believe it's a cornerstone of our arguments for the benefit as well as the sequential sort of submission pattern. The agency wants to see something they werent worried from that so we can't.
Do things in parallel as much as we'd like to and so as that sequential pattern of providing more getting feedback going back may be meeting with them formally or informally that.
Has kind of pushed it out a little bit, which again I think is entirely very positive.
Because we've never received anything back.
As indicated otherwise.
Very helpful. Thank you.
Thank you.
Our next question will come from Jonathan Ashok with Roth Capital Partners. Your line is open.
Thank you guys good evening.
Do you break down the revenue to the extent you can.
It's not 100% I.
A remarkable France can you help us out with just that Nitty gritty.
Yes.
There was a portion of that was.
Royalties that came into us from net sales of the scars or percentage of that and you'll see when we file our 10-Q that was a brown.
We had around we recognized about 200000 or so.
Royalty revenue on our stores.
Okay. So it's simply about $2 seven narrow down cobalt 200 stores and no other line item right.
Yes.
Thank you very much guys.
Thank you.
This does conclude the Q&A portion of today's call and I would now like to turn it back to traffic Nichols for any additional or closing remarks.
Thank you.
Thank you again for your participation and joining us today I appreciate the good questions and additional analysis and hopefully additional color on what we're doing and what we hope to achieve such as the remainder of this year, but next year as well. So thanks, everyone Hope you have a nice evening.
Thank you ladies and gentlemen, this does conclude today's Kemp Pharm third quarter 2022 earnings call and webcast. You may disconnect. Your line at this time and have a wonderful day.
Okay.
Sure.
Okay.
Thank you.
Okay.
Okay.
Thank you.
Thanks.
Thank you.
Okay.
Okay.