Ladies and gentlemen, thank you for standing by and welcome to KemPharm's First Quarter 2020 Corporate Update Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Now I would like to turn the call to Jason Rando.

Good afternoon, and thank you for joining our call today to discuss KemPharm's first quarter 2020 corporate and financial 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. KemPharm disclaims any obligations to update or revise its forward-looking statements, except as required by law. More complete information regarding forward-looking statements, risks and uncertainties can be found in the reports KemPharm files with the SEC, which are available on KemPharm's website at www.kempharm.com, under the Investor Relations section. We encourage you to review these documents carefully. Speaking on today's call will be Travis Mickle, KemPharm's President and CEO; and LaDuane Clifton, CFO. Following the remarks, we will open the call to your questions. With that, it is my pleasure to introduce Travis.

Thank you, Jason, and thanks everyone for taking the time to be with us today. There are certainly a number of updates to provide, so I'll jump right into those. First, as many of you have seen, the KP415 NDA was accepted for review by the FDA on May 1. This acceptance triggered a $5 million payment obligation from our partner GPC as part of our license agreement, and I believe that reflects the importance of this milestone. We also announced that Corium, which is a GPC portfolio company, will be commercializing KP415 and eventually KP484. KemPharm actually has a long history with the Corium team, but I'll get more into that in a minute. I'm also happy to report our third consecutive quarter with development services revenue from our partners, GPC and Corium. I think this is an underappreciated aspect of our partnership, but certainly one that highlights the value that KemPharm brings to the table. As is the case until approval, our cash reserves will remain limited as we aggressively manage revenue expenses, as well as balancing any potential financing needs with risks. The goal ultimately is to address the company's needs in the most balanced fashion available to us. You can see that this has led to a position where we've addressed our debt in the near term and brought in additional revenue that has pushed our forecast out past the potential PDUFA date for KP415. For those who may not be as familiar with the whole KemPharm story, there are just a few highlights I'd like to run through quickly as a background. First, I want to remind our listeners today of the general terms of the license agreement with GPC and Corium. In short, this is a development and collaboration agreement. We work closely with both GPC and Corium, with the common goals of an approved KP415 product with the best possible label, the desired label, and the maximum market opportunity. They believe, as we do, that those goals are very achievable. After the $5 million acceptance payment, the next potential milestone is approval, and the size of that milestone will ultimately depend on the label itself. Additionally, I do believe that there has been a general misconception that the economics of this license are entirely backend loaded. As you can see for yourself, that is not the case. While we cannot always provide all the details, this agreement in totality exceeds the potential value of the license that Shire originally signed for Vyvanse and is comparable within the first few years of each of those two agreements. This partnership represents both long and short-term value for KemPharm and KP415, but also in KP484, the option products 879 and 922, as well as our support services and general strategic alignment with Corium. I believe this has been vastly underestimated. Turning now to our commercial partner Corium, we believe Corium has the exact right team and experience to make KP415 the commercial success we all believe it can be. Not only do they have the right team in place, they are also led by the right leader. I have known Perry for a while now and we've both been very aware of each other's abilities and experiences for far longer than that. Needless to say, there is no one else I would trust to take on the responsibility of marketing KP415. For some context, most of you are aware that Shire at one time had a roof over KP415, and while Perry was there at that time, we were upset that he departed Shire during the acquisition by Takeda. Ultimately, we believe that's been best for all of us. I hope that you can all see the whole story that has been presented here. KP415 has been viewed by many as the methylphenidate version of Vyvanse now going to be commercialized by the very person who brought Vyvanse forward. I believe Perry and I both think it has some potential features that are even better than that Vyvanse version. We hope to provide a forum for you to hear that directly from him in the coming months. Stay tuned for more on that. Now, just a quick few slides on KP415 and the ADHD market. We've stated for some time now that our market research had indicated there are a number of unmet needs in this very large opportunity with not just methylphenidate-based products, but ADHD as a whole. Mainly, those are focused on duration of action, onset of action, and the possibility for abuse. Looking at KP415 specifically, we believe we have addressed all of those. In comparison, Vyvanse has a nice duration of action up to 13 hours for kids but takes about an hour and a half to kick in and has been observed to have a lower potential for abuse. With KP415, we are bringing forth a slightly improved onset of action but in the methylphenidate-based products. This is predominantly a product that will be introduced in pediatric patients. Our focus has been to initially improve upon methylphenidate products and also provide benefits that surpass those of Vyvanse. We look forward to KP484 as KP415 is the left hand to Vyvanse’s right hand, while KP484 is also very much the left hand to MYDAYIS, which was the Shire launch product that Perry was a part of during his time at Shire. However, we have a different overall profile, as well as the potential for less abuse with the prodrug being a predominant component of that product. Now, I'm going to turn now away from KP415 and our partnership and look forward to some of the things we've been working on, primarily with the Deerfield discovery collaboration that we announced back when the debt was restructured. We are focused here on potential collaboration with our largest debt holder and long-term financial partner, Deerfield, to discover up to two new prodrugs. These early collaborations have the potential to add value at multiple stages, including providing capital for R&D costs, licenses, milestones, royalties, and other business development opportunities. We look forward to working with Deerfield to build out these collaborations and will provide more updates in the future as they progress. Looking at APADAZ, we can now turn our attention to another commercial partner, KVK, which has made significant progress in a difficult opioid environment. As you're all aware, opioids have been heavily scrutinized, and everyone from patients to manufacturers has come under intense pressure, whether from litigation or economic factors. In spite of that, I'm happy to report that KVK has informed us that APADAZ is now available nationally, with 19 states having added the authorized generic form of APADAZ to their Medicaid preferred drug lists. Additionally, we are now located on the FSS, leading to improved commercial access. This represents a remarkable progression even as a Tier 1 generic comparable to hydrocodone and acetaminophen. With that, we look forward to the next steps of working with KVK to commercialize APADAZ. We are both optimistic about the prospects despite the current environment and will continue to provide updates as they happen. With that, I believe I'm going to return the discussion to LaDuane.

Thank you, Travis, and good afternoon everyone. For Q1 of 2020, we reported $2.1 million in services revenue compared to Q4 2019 revenue of $1.4 million. As Travis mentioned, this is KemPharm’s third consecutive quarter of reporting revenue. We expect this trend to continue as we work with our partners on the development of KP415 and our other product candidates. We reported a net loss of $5.8 million or $0.12 per basic and diluted share for the quarter. This reflects a significant improvement compared to the Q1 2019 net loss of $12.3 million or $0.46 per basic and diluted share. Over the past year, we have undertaken a number of measures to improve our financial position, including a 36% reduction in our workforce as well as other G&A cost reductions, shifting development costs to our partners and adding services revenue. Considering that net loss includes several non-cash items such as interest expense accruing the principal of $2.2 million, non-recurring severance expenses of $800,000, and stock compensation expenses of $600,000 during the quarter, it is clear that we have made substantial progress in improving our financial position. Returning to the balance sheet, as of March 31, 2020, we had total cash of $2.5 million, which was a decrease of about $1.1 million compared to December 31, 2019. I am glad to report that based on our current operating forecast, along with the expected revenues and our existing resources, our cash runway is expected to extend past the potential PDUFA date for KP415 and up to the debt maturity date of March 31, 2020. We expect that our cash burn rate will be approximately $1 million per quarter, but we are actively working to reduce that as much as we can. As of March 31, total debt was $68.6 million, which was a decrease of $8.7 million compared to December 31, 2019, which at that point was $77.3 million. This was directly due to Deerfield exchanging under their exchange agreement, which was part of the December 2019 transactions. They exchanged $9.6 million worth of principal and that was offset by interest added to principal of about $900,000. As of the end of Q1, Deerfield still has approximately 10.4 million shares remaining under their exchange agreement. Lincoln Park Capital, the equity line of credit that we entered into during the quarter back in February 2020, has also contributed to available resources; as of the end of the quarter, March 31, 2020, we had received proceeds of $1.1 million for 4 million shares under that facility. There are still approximately 5 million shares remaining under the facility. As we pointed out when this was first established, we see this as providing capital flexibility in the event that there are timing delays or other unexpected items that may occur. As of May 11, we currently have 65.7 million shares outstanding. Now, I'd like to quickly provide an update on our compliance with our NASDAQ listing. Today is May 12, and as of today, we have not yet regained compliance with the two listing requirements that are outstanding: both the market value of listed securities, commonly known as market cap, which is a minimum of $35 million, and the bid price, being a minimum of $1. NASDAQ back in April, in response to the COVID-19 crisis, announced that they were providing an extension to non-compliant issuers or companies. However, it was only specific to the public float requirement and the bid price requirement. Unfortunately, NASDAQ did not extend anything related to the market value of listed securities. Therefore, we are still under the requirement to reach a market cap of $35 million by tomorrow. Given where we are today, I believe it's unlikely that NASDAQ would give an extension; we expect to receive a delist determination. However, if this occurs or when it occurs, we intend to list our securities as soon as possible on the OTC venture market or OTCQB, and we expect that we'll be able to do that in a way that minimizes disruption, if there's any at all, in the trading of our securities. Obviously, the core business, as Travis and I have been discussing, is not affected directly by this change, and we hope to see that there continues to be solid trading execution in our securities. With that, I'll turn back to Travis.

Thanks, LaDuane. As we look ahead now that the NDA acceptance is behind us and look forward to the potential PDUFA in March 2021, there's a lot of work in front of us. We'll certainly let you know the exact date once the FDA confirms it and we receive that in a day 74 letter, which we don't expect to get until later this week. We will continue along the way to support the approval of KP415 as well as work closely with Corium among commercial supply and launch. They are ramping up their full sales and marketing organization, and we are prepared and ready to support their needs at any point. As I mentioned previously, we do hope to provide an update directly from Corium on the KP415 opportunity and ADHD market. I suspect they are currently jumping in with both feet to get everything up to speed, and given the current COVID environment, this may not happen until later this year; it's not something we view as imminent, but this is my best guess at this time. I mentioned upfront the need to balance risk, cash, and dilution. We believe that by managing those factors closely, we have mitigated risk related to potential factors outside our control, like NDA filing timing that was delayed from what we had thought, any potential acceptance risks, and the factors we are all currently experiencing related to COVID and market conditions. As we plan ahead, we look to be able to open this resource up and look towards our milestones and potential revenue as positive factors moving us forward. We are not blind to the issues in front of us, and with the NDA acceptance behind us, we can now look to address the second phase of our debt restructure. There are multiple options available to us, and we hope to have something in place prior to our close proximity to the PDUFA. We should all consider that market factors and our partners will play a significant role in what that timing will be and what the ultimate structure will be. Looking beyond KP415, Corium is currently evaluating the full potential of KP415, as well as KP484 and the option products. KP415 presents far greater potential when we think about how and who could use a product like this, and what we could add to it with Corium to optimize those opportunities. As highlighted previously, we are also looking forward to potential discovery through our collaborations and the next stage in the launch of APADAZ. All of these are developing stories that could bring near-term and long-term value to KemPharm. While I can certainly acknowledge the remaining risks to the business, the value we have from the partners we have brought in and the products we can develop presents a very compelling value proposition. It gives me confidence considering we have a $0.5 billion plus deal in a huge market with the absolutely right partner, the potential upside of APADAZ, and other valuable assets that we can add to this. This actually concludes my section of the call, and I would like to open up for questions.

And our first question is from Oren Livnat with H.C. Wainwright. Please go ahead.

Congrats on that long-awaited NDA filing. I have a few questions. First of all, you've highlighted as advised several times that people are missing, I guess, the relevance of Corium in the ADHD space, given their history and current makeup. And I'm just curious, and you pointed to the fact that they probably will have some kind of coming-out party before the PDUFA. But is there anything holding you and them back now about talking more about this asset? There hasn't been a ton of innovation in this space, and I'm just wondering, is it for competitive reasons that we're not talking about this asset more publicly yet or are we waiting to see this label? I have a couple of follow-ups.

No, yes we're certainly not going to wait to see the label. They fully believe, as we do, that the label is going to be what we've said all along; it's going to be with the onset, duration, and abuse features that we have seen in our clinical studies. It's been multiple factors here; I think until the NDA was accepted, this was really managed by GPC, which is kind of the mothership, as it were, to Corium. Now Corium is officially the commercial partner, and it's going to take them some time to evaluate all the different opportunities. They are very familiar with ADHD, but until recently, we couldn't even announce that they would be the intended commercial partner. So we'd like to do it as soon as possible. I think they fully understand what the value proposition is. We'd like to do it in the best form possible, and at this point, it's likely not the ultimate timing that both Corium and KemPharm would like to see for that discussion.

Okay. And you mentioned that label; that's a huge issue. I am curious, since you all have been working for several extra months with GPC on this NDA, what sort of process have you pursued to maximize your chances of getting that best-case onset duration claim? Have you been conducting any other analysis? Did you submit data to the FDA that we haven't seen? Is there anything you can share with us there?

No, we haven't submitted anything extra. We didn't do any additional analysis. It's really what everybody has seen publicly. Of course, that all has to be put in the context of the rest of the product and how it all makes sense for a potential approved product. I think it took a little bit longer for GPC to get their consultants up to speed and then get through all their subsequent reviews. Ultimately, it made the NDA better, but there really wasn't any additional work that was done; it was all baked into the data packages we provided and worked with them to formulate the NDA together.

Okay. And just lastly, if I may on that milestone for approval, clearly, it's going to be dependent on the labeling. Have you ever given us bookends around that with regards to the best and worst case?

I mean you can't pin it down, but it would be a bit facetious because the $58 million is the most it could be for both KP415 and KP484, and zero if you don't get approval, right? That's really the best we can do right now. As things materialize and get closer, GPC has been more willing to allow us to disclose more. We did that as well; folks had thought about the $10 million upfront; they didn't realize there was another $8 million that was actually paid out in reimbursements, or in total, that organizations that receive upfronts, that money is intended to cover additional fees and anything that the organization would need to pass through. In this particular case, that didn’t show the full story. They have provided about $23 million roughly of reimbursements in milestones, and there is more to come that's not subject to that restriction. We believe there is better economics here for us than people can appreciate at face value.

Thank you. And now I would like to turn the call back to Travis Mickle for his final remarks.

I just want to thank all of you again for your time today and greatly appreciate your continued patience and support. We will continue to press forward to optimize the value of these agreements and address our issues as judiciously as possible. Thanks again.

Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.