Ladies and gentlemen, thank you for standing by and welcome to the KemPharm Q2 2020 Corporate Update Conference Call. At this time, all participants’ lines 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 may be recorded. I would now like to hand the conference over to your speaker today, Mr. Jason Rando with Tiberend Strategic Advisors. Thank you. Please go ahead, sir.

Good afternoon, and thank you for joining our call today to discuss KemPharm's Second Quarter 2020 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. 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 their remarks, we will open the call for questions. With that, it is my pleasure to introduce Travis.

Thanks, Jason, and thanks everyone for joining the call today. As many of you’ve already seen or heard over the last quarter, we've had a number of advancements regarding our plan for KemPharm over the coming quarters. First and foremost, we received the NDA acceptance for our lead product KP415 by the FDA and a $5 million milestone payment from our partner, GPC. Additionally, we received our Day-74 Letter from the FDA, setting the PDUFA date of March 2nd, and confirming they do not anticipate the need for an advisory committee at this time. We also announced that Corium, a GPC portfolio company, will lead the commercialization of KP415. I will go into this in a little more detail, but this is a highly experienced organization led by many who were formerly Shire executives. We recently announced two patents that were granted, adding five more years to the patent life for our serdexmethylphenidate, which is the prodrug in both KP415 and KP484. I'm actually going to ask LaDuane Clifton to provide our financial highlights as well as updates on our improved financial position.

Thanks, Travis. In addition to those regulatory and product updates, our financial results for Q2 were also very positive. We reported revenue of $6.9 million, our fourth sequential quarter of earning services revenue, comprised of a $5 million milestone payment and $1.9 million of services revenue. That led us to a net income of almost $1 million or $0.01 per share, also very good. We ended the quarter with $6.6 million in cash, which is a nice increase compared to where we were at the end of Q1. The revenue and lower expense pace have reduced our projected cash burn to $1 million a quarter or less, and with the principal and interest payments related to our debt being pushed out to March 31st of '21, these factors combined ensure that our cash runway is extended up to the debt maturity date, which is again March 31, 2021, and past the PDUFA date for KP415.

Thanks, LaDuane. For a little more context on the KP415 regulatory and commercial planning update, I mentioned the PDUFA date and the Advisory Committee. On the last call, I mentioned that we would plan to have a mid-cycle review meeting with the FDA. That's actually been scheduled for tomorrow. Any relevant updates from that meeting would be provided in a subsequent press release. In addition to announcing that Corium is now the lead for the commercialization, we continue to earn consultation fees under this arrangement. We also plan to have a discussion during a webcast investor analyst call where the Corium leadership team would provide us all with updates on their sales and marketing planning, as well as their view of the market. This planning is still in progress, and the exact timing will be determined primarily by Corium's schedules. We want to pick an opportune moment in the fall timeframe. I will now turn it back over to LaDuane to discuss more about the APADAZ commercialization and to provide you with the full financial rundown.

Thank you. Regarding APADAZ, we have partnered that asset to KVK Tech, one of the leading generic manufacturers in the U.S. They are the leading manufacturer of oxycodone generic products in the U.S., and this update is based on their recent feedback, including that the number of Medicaids that have added the authorized generic of APADAZ has now expanded to 23, which is very helpful. The product has been listed in the federal supply schedule, opening up additional channels for various federal agencies. Admittedly, KVK acknowledges that the progress has been slow. The environment for opioids is very challenging and requires caution regarding physician awareness of the product and its potential benefits for patients. KVK’s approach so far has been focused on providing education to pharmacies and physicians regarding responsible opioid prescribing. We hope to have more news from KVK over the next few months as they continue those efforts. Anecdotally, KVK is committed to the product, and although the progress might be slower than some expected, we see good progress. We will share updates as KVK provides them to us. As a reminder, under the license agreement, there is up to $3.4 million in initial adoption milestone and other cost reimbursement payments payable to KemPharm upon achieving a certain level of annual utilization of APADAZ. Based on KVK's feedback, we believe this could be achieved as early as the end of the year. There is a profit share component to the license agreement, but achieving pricing parity with generics is critical for profit share eligibility. We believe this could happen in 2021, but it will take some time after achieving the milestone to reach that level of profit for the profit share to apply to KemPharm. Turning now to our Q2 financial results, we had revenue of $6.9 million, as I mentioned, which consisted of the $5 million milestone payment earned for acceptance of the KP415 NDA and $1.9 million of services revenue earned while supporting various activities, including Corium's commercial preparation for KP415. This marks our fourth sequential quarter of earning services revenue, and we expect this trend to continue beyond the potential launch of KP415, which, if approved, is targeted for mid-2021. This revenue led to a net income of nearly $1 million, specifically $900,000, equivalent to $0.01 per basic and diluted share, representing a significant increase compared to a net loss of $9.3 million, or $0.33 loss per basic and diluted share, in the same quarter of 2019. Our operating income for Q2 2020 was $2.6 million, driven by revenue and a reduced expense base. R&D expenses were $2 million for the quarter, reflecting a 59% reduction compared to Q2 of 2019. Our G&A expenses were $1.7 million, which was $1.3 million less than Q2 of last year. Collectively, these positive income statement results led to an increase in cash at the end of Q2 2020. We had total cash of $6.6 million as of June 30th, which was an increase of $4 million compared to March 31st, Q1. Based on our operating forecast, expected future revenues, and existing resources, our cash runway is expected to extend past the PDUFA date and up to the debt maturity date of March 31, 2021. Total debt at the end of Q2 was $67.3 million, representing a reduction of $1.3 million during the quarter, resulting from a $3.2 million reduction from the Deerfield exchanges under an agreement entered into back in December of 2019, which was offset by interest added to principal of $1.3 million and amortization of debt discounts and issuance costs of about $600,000. At the end of the quarter, approximately 5.2 million shares remained under the Deerfield exchange agreement, which has since been fully utilized. Additionally, during the quarter, we utilized the remaining portion of the Lincoln Park New York facility, raising an incremental $1.1 million in cash. There are no additional shares remaining under that facility as of the end of Q2. Looking ahead, we are focused on improving our financial position. As discussed previously, restructuring our debt is a high priority. We continue to pursue and evaluate various options available to us to reposition our balance sheet, which may include royalty financing or new corporate debt solutions that utilize several features. We aim to balance the cost of capital with any potential dilution to optimize the final outcome of this process. While there are no guarantees, we believe it remains possible to complete this process prior to the KP415 PDUFA date. As Dr. Mickle mentioned, we have several catalysts leading up to that time which we believe will support these efforts. Uplisting to NASDAQ is another component of improving our financial position that we are addressing in parallel with the other debt restructuring efforts. We hope that all these efforts will build the momentum necessary for us to return to trading on NASDAQ, but the timing of such a move is difficult to predict, as these efforts are closely intertwined. We will keep you updated as we make progress with this process. Back to you, Travis.

Thanks, LaDuane. To wrap up and look forward, the PDUFA date and the mid-cycle review meeting is tomorrow, and we'll be diligently working on that tonight. We'll provide updates as they come in. As far as the progress with Corium, the next update will come directly from their team. We are preparing for that and will share that information as soon as possible. As LaDuane highlighted, we've significantly improved the company’s financial position and are close to breakeven, bringing in additional revenue from our consulting agreement with Corium, while also exploring other opportunities to support the commercialization of KP415. We're also working closely with Corium, who is currently focused on commercialization and looking at pipeline products. Future updates will be provided as both organizations gain clarity. Lastly, as LaDuane mentioned, KVK is continuing to advance APADAZ, and we remain excited about that opportunity. We hope to achieve the adoption milestone by the end of the year, and this seems plausible. With that, I'd like to conclude and see if there are any questions.

Our first question comes from Oren Livnat with H.C. Wainwright. Your line is now open.

So, on KP415, you got that Day-74 Letter which obviously confirms the timing and the outcome. I'm wondering, is there anything that could possibly be contained in there that gives you any insight, good or bad, around your expectations for potential label claims of onset duration? Or is that the kind of thing that might come up, if at all, in tomorrow's mid-cycle review meeting? And if so, is there any chance we hear from you if there’s any change to your strategy?

No, and maybe. The first part of your question, the Day-74 Letter really just confirmed the date and outlined that there will be future meetings. The product itself is a new molecular entity, and we believe it will also be designated as a new chemical entity once approved, thus subject to a regulated set of milestones and meetings the sponsor participates in. This first mid-cycle review meeting is scheduled for tomorrow, and that's where they may bring up discussion topics or provide additional information. As of today, we don't have specific indicators about what it may look like legally. At some point, that will change; we are not allowed to disclose such conversations but can share some indication of where we may stand closer to the PDUFA date.

Okay. I think I asked you something similar every time we talk, and that is about Corium's visibility. I have the courage to hear about this whole event they're hopefully going to do. But besides the investor community, what about the ADHD treatment community with this potential approval in the near future? Should we expect Corium to make the industry aware of this product that might be coming with this theoretical profile? And perhaps also making the industry aware of their corporate presence?

That's really a question for Corium, and I wouldn't want to guess their entire plan. I do know they are actively preparing the market for launch. With March 2nd as the PDUFA date, we understand that 70% of our product is unscheduled; the prodrug of methylphenidate must be scheduled. We know that is a 90-day process with the FDA or the DDA by statute. Therefore, we're looking at a mid-year potential launch, which aligns well with the start of the school year. To my understanding, they are doing all they can to prepare. However, as you mentioned, we will see increasing activity, including conferences and engagements with KOLs and advocacy groups leading up to and after an approval.

Great. I look forward to that. KP484, it sounds like it's up to them now regarding the next steps, but should I assume there will be no developments until there is more certainty around KP415? Is there any reason to assume that whatever happens with KP415 from a regulatory perspective has a direct impact on KP484? I mean, obviously, the FDA had some issues with the program itself, but they might take different approaches.

That’s a question I have for Corium as well: when they will begin working on KP484? I don’t have visibility into that. I haven’t seen any indications of concern based on KP415 interactions. They’re making their own assessment, and they need to get ready to launch KP415 first before addressing KP484. That doesn’t mean they won’t start working on it early, but we haven’t been notified of any such plans yet.

Thank you. Our next question comes from Oren Livnat. Your line is now open.

Thank you. And thanks everyone for joining today. Again, we continue to make advancements. We will keep working on our plan and provide updates as they happen in real time. We appreciate your support and continued interest in the company and look forward to bigger and better things in the near future. Thank you, everyone.

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