Ladies and gentlemen, thank you for standing by, and welcome to KemPharm's First Quarter 2021 Results Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker host, Jason Rando at Tiberend Strategic Advisors. Please go ahead.

Good afternoon, and thank you for joining our call today to discuss KemPharm's First Quarter 2021 Financial and Corporate results. Before 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 KemPharm's expectations regarding future operating results. Forward-looking statements are made pursuant to the safe harbor provisions of the federal securities laws and represent management's current expectations. Actual results may differ materially.

Thanks, Jason, and thanks, everyone, for joining us today. As most of you know, and I'm sure all of you that joined the call are aware, the FDA-approved AZSTARYS back in March 2. Certainly, one of our large highlights here from the first quarter of this year. We do expect our partner, Corium, to launch that product in the second half, presumably around the start of fiscal year, if all things go well. We also announced during this quarter a number of different highlights, including an amendment that happened after the first quarter to the license agreement, now eligible to receive up to $590 million in sales milestones and royalties on top of that, that go out to the length of the patents. We also recently just announced that serdexmethylphenidate, which is the prodrug in AZSTARYS received a Schedule VI classification. This is the only methylphenidate product that is a Schedule IV, actually, the only methylphenidate product that's any different schedule than a Schedule II. And I will actually walk through a little bit of those key differences and how they're prescribed and handled, the differences there between those two classifications. Just to say it's fairly meaningful for a patient, physician and a pharmacist, and we believe it provides a key differentiator for AZSTARYS as well as potentially KP484, and in our own product, KP879. LaDuane is here to discuss all the great things he's accomplished since the beginning of the year. So I won't take away much of his thunder there. Of course, the big ones being complete transformation of our financial situation, relisting on the NASDAQ, repaying all the debt and putting us in a great position to amend the agreement and be able to invest in our own future again as well as have ample capital to do what we need to do strategically and with the organization moving forward. And then beyond AZSTARYS, we're actually getting very excited now about the initiation of a clinical trial in mid this year on KP879 that is our lead product for the treatment of stimulant use disorder or stimulant addiction, extremely exciting product, a unique opportunity there. We still are working under the expanded services agreement with Corium. And we continue to watch with our partner, KVK Tech, and the launch of APADAZ. And as soon as we're able, we'll give more details on how that is progressing.

Thank you, Travis. Certainly, Q1 was a culmination of a lot of work that's gone into our financial restructuring. And I'm very thankful to say that we've come out on the other side, very strong as a result. A series of transactions, obviously, we've discussed this with you before, so I won't go into great detail. But of course, we regained our listing on the NASDAQ capital market. We were able to eliminate all of the Company's debt. We added new capital to propel growth and really create flexibility that we did not have before. It's important to note here, I added a bullet here regarding the incremental capital that continues to flow in as the warrants that were generated from the January transactions are exercised. And we don't really predict when that comes in, but those warrants have a five-year life, and have a strike price in the range from $6.36 all the way up to $8.125 per share. And so those come in from time to time as the holders decide to exercise, but it is an incremental source of capital, which is already included in the fully diluted share counts.

Yes, of course. And thank you to everyone who's send in questions. We hope you find this format helpful. Okay. So the first question, how could KP879 ever fail to receive a Schedule IV DEA scheduling, if approved?

Yes. We just -- we looked at this one. I don't imagine there's any mechanism in which it wouldn't keep the designation it already has. It is a pure SDX-contained product, which has already been determined to be Schedule IV. That all being said, I think we all recognize there's significant risk in any regulatory body, FDA and DEA included. So I think very high probability, but I can't imagine, you can't imagine. But at the same time, I think it's very, very unlikely that it would be anything different.

Okay, great. The next question we received is related to the commercialization of AZSTARYS. Can you give us an example of the sales pitch that might be used to detail AZSTARYS while counter detailing close competitors?

Well, of course, Corium is the marketing partner, and we are really -- not allowed really to say much about what they're doing. They do pass things along that they give us permission to pass along to our shareholders and investors. At the same time, we've touched on all the highlights, and those are the highlights that are differentiated above the other products that are out there. I think the C4 is a big differentiation. It's obvious we have the height and weight, we have the administration and we have the efficacy. So you have all those different advantages. That being said, we didn't do head-to-head comparative trials. So the counter detailing portion of that -- physicians will just have to know, and have known it with -- through their clinical experience, how this product is now different than those other products.

The next few questions, actually, we received several related to clinical and regulatory time lines for both KP879 and for KP8 -- excuse me, KP484. We've actually already touched on the 879, and maybe we could speak a little bit to 484?

Yes, KP484 was licensed under the agreement by GPC. It is entirely up to them whether or not and what the time lines would look like for the development of that product. We have provided our kind of input and what studies would be needed and so forth that you would expect. At the same time, they're vigorously working on the launch of AZSTARYS. They're also working now on adding a potential preschool indication onto the AZSTARYS label. We think there's a lot more value right now to pushing them to help with that process. And as soon as we hear from them and as soon as they make the decision, we will pass along any updates on KP484.

The next question is related to really the treatment of stimulant use disorder. And this person sort of provided a comparison of treatment options. There's a number of treatment options for opioid abusers while at least they were not able to find any similar or any treatment options for stimulant abuse, and so just curious about how we view that. Are there, in fact, any other competitors or products that can be used, whether indicated or otherwise? And then related to that, could we speak to the potential to use KP879 outside of just treating stimulant use disorder?

Well, the question about, is there anything available? I think that's a good question, thinking about why we chose stimulant use disorder. There is right now nothing available. Everything is more kind of just to help with some of the symptoms and not really treat the disease itself, not be able to help as the opioid addicts with those options that they have with buprenorphine, methadone and so forth. Those aren't available for stimulant use. It's a completely different mechanism. So if you're currently giving antidepressants and other sort of products, it would be really beneficial to a patient, certainly for a physician to have a lower scheduled safer product that could now be available for them to use to treat statement use disorder, which would include methylphenidate, cocaine and other stimulants. And then as far as the potential outside, I mean, there's been a lot of work that's been done with methylphenidate in general, but this does provide us with a unique opportunity to explore looking at now it's C4, looking at the properties of just SDX and saying, well, what about other indications. And we have a number of patent applications already been published, patents that have been issued, looking at things like binge eating disorder, shift work disorders. So where you have overnight shifts and you change your hours repeatedly, anything with excessive daytime sleepiness associated with narcolepsy and other things. All of those are -- were always theoretical, but certainly now are something that we evaluate in more detail.

Okay. The next question is one I'll probably take because it's related to -- I guess, here's the question. Has the Company updated its budget or its operating forecast for development of its products and programs? And at what rate does the Company expect to utilize the proceeds from the recent capital transactions? So I'll take this one. And you'll notice in today's presentation and also in the press release that we didn't really provide a cash runway because in a lot of ways, our current burn rate -- how long does it -- how many quarters does $76 million last if your burn rate is between $1 billion and $1.5 million per quarter? So it seems like a sort of a strange question. And really, the thing about it is we currently have a relatively low R&D spend rate. And so something that's very important to us is that we take some time right now to not only look at the programs we have internally, but also are there opportunities externally. And as we evaluate these opportunities, we hope to put together an updated plan for how we might consider deploying the capital so that we can create long-term value for shareholders. So that's a process that we're always looking at. But certainly, we're looking at carefully right now together with our Board. And so -- but with that said, we certainly have enough cash to carry through the development and continue what we're doing with KP879. And as we have updates or other additions to the pipeline or whatever decisions come out over the next several months, we'll continue to update you. I will say at the moment, though, our burn rate continues to be around $1 million to $1.5 million until we make some judgments around incremental…

All right. Well, again, I appreciate everybody's time. Hopefully, you can hear from us, we're diligently working to assess everything that's going on here at KemPharm. We want to make sure that we take all the right next steps, do everything that we can possibly do to add the most value as well as make sure that we're continuing to address the shareholders' needs. So while we just received word around the DEA scheduling, you can imagine that, that's created a whole new set of options and a whole new set of opportunities. So while we evaluate everything, we really appreciate your patience. And we will, as always, continue to provide meaningful and timely updates whenever possible, especially as it relates to the value creation we hope to achieve here at the Company. So with that, again, I would like to thank you for your time, and appreciate you joining. Thanks, everyone.

Ladies and gentlemen, that does conclude conference for today. Thank you for your participation. You may now disconnect.