Thank you for standing by, and welcome to KemPharm Fourth Quarter and Year-End 2021 Results Conference Call. Please be advised that today's conference may be recorded. I would now like to hand the call over to Jason Rando of Tiberend Strategic Advisors.

Good afternoon, and thank you for joining our call today to discuss KemPharm's fourth quarter and full year 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. KemPharm disclaims any obligation 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 KemPharm's filings with the SEC, which are available on KemPharm's website under the Investor Relations section. Speaking on today's call will be Travis Mickle, KemPharm's President and CEO; and LaDuane Clifton, CFO. Following the remarks will be a question-and-answer session, which will include responses to questions that were submitted during the past week. With that, it's my pleasure to introduce Travis.

Thanks, Jason, and thanks, everyone, for joining today. A little bit of an introduction into KemPharm for those who are new to us. I'd like to speak a little about our value proposition. KemPharm is an innovative company developing novel treatments in CNS and rare diseases. Historically, we've accomplished this via the use of prodrugs like our approved and partnered products, AZSTARYS and APADAZ. Now our focus has turned more to a broad base of drugs, including those in areas with significant unmet needs and high value with the potential to internally commercialize those at some point if we decide to do so. While we have two approved products, we remain, at this time, a drug development company and are unique in today's market, one with revenue and no need to raise additional capital. Turning now to a year-end review of 2021. As many of you may be aware, there was a shareholder letter sent out in 2020 outlining what needed to be done to significantly change the situation of the company at that time. If you were a shareholder at that time, you are very aware that situation wasn't very good. Based on that plan, we were able to execute a remarkable transformation of KemPharm in 2020 and 2021, highlighted by regaining our NASDAQ listing, eliminating all debt, and the approval and launch of AZSTARYS. That being said, we continue to build toward the goal of creating substantial value for long-term shareholders and fundamental value in the company. Value still requires some cleanup, including reducing any remaining overhang, placing critical tools in place to monetize or create value, as well as capitalizing the company so that future dilution would be unnecessary. In today's marketplace, this is an invaluable resource to have. Other development companies are seeking funds; we have no need to do so. In January, we outlined our plans for 2022 and beyond, and we're already well underway in executing that plan. We initiated the development program for KP1077 where we believe there's a high unmet need and a high value proposition with a product we've already developed as part of AZSTARYS. We also continue to expand opportunities in our pipeline through both identification of business development resources and internal programs and products. The AZSTARYS launch is gaining traction. We've seen this through updates from Corium, and I'll provide more details later. The full national team is in place, and currently they have over 110 million commercial lives covered. This is all built on the foundation I just discussed: a strong balance sheet able to support everything we intend to do in the near and long term. Cash and cash equivalents and long-term investments were $127.8 million as of year-end, and our capital extends well beyond 2025. Turning now to our pipeline highlights. KP1077 for the potential treatment of idiopathic hypersomnia is our most advanced candidate. It will be Phase 2-ready, and we anticipate the start of that trial in Q3 of this year. I'll give more details about milestones closer to the end of the presentation. That study will be followed by initiation of studies in narcolepsy where products like this have shown promise, as well as potentially adding to our sleep disorder pipeline through either internal or external identification or both. As many of you are aware, we've also explored stimulant use disorder. Again, this is an SDX-related product, similar to KP1077. The study and results lead us to believe we need external funding and collaboration to advance that program. We are also trying to add to our pipeline with more advanced candidates, focused on building additional clinical milestones and potential commercial assets as we build out our portfolio of CNS rare disease products. Let's focus a bit more on SDX specifically and the SDX product candidate opportunity. When we look at KP1077 as a potential treatment for idiopathic hypersomnia, IH fits the bill well for a CNS rare disease. There are roughly 37,000 patients identified and currently seeking treatment in the United States. That number grows globally, but there is clearly an identifiable market in the U.S. The symptoms for IH are very debilitating: chronic daytime sleepiness to the point of inability to drive; inability to work; difficulty maintaining social relationships; long, unrefreshing naps; extreme difficulty upon waking, also known as sleep inertia; and severe brain fog. Many other products do not address these symptoms effectively, and IH patients report that current medication effectiveness is fairly poor. Turning to how we believe KP1077 could overcome this: the product candidate is entirely composed of our SDX, serdexmethylphenidate, with multiple dosing options depending on patient needs. It's dosed either once before bed or once before bed and then upon waking. This addresses the two issues I mentioned before: sleep inertia and waking, and daytime brain fog. If taken the night before, it should help produce an effect early in the morning and aid in waking. If taken in the morning, it will help with brain fog throughout the day. When both are taken together, you address those two major issues. SDX has already been designated as a C-IV by the DEA; this is an inherent benefit to the molecule. As it is released as methylphenidate, there's no drug-drug interaction potential beyond that expected with methylphenidate products, and it has no interaction potential with hormonal contraceptives. A common comorbidity with IH is depression, and SDX has no significant drug-drug interaction potential with antidepressants. We will study greater tolerability: can we increase dose because the drug is more tolerable than other options, including other methylphenidate-based products, and achieve efficacy at higher doses? The dosing regimen is unique and provides an option that doesn't exist today. We will study a lessened effect on heart rate and blood pressure versus other methylphenidate products. The product has orphan drug designation potential, as well as fast track and breakthrough options, and solid IP through 2037. We recently announced the full results of the trial we conducted with SDX initially focused on stimulant use disorder, but these subjects were used to high doses of stimulants historically. When we looked at the trial data in full and the history of methylphenidate use, note that Ritalin and Ritalin-SR are currently indicated for narcolepsy. Narcolepsy is a rare sleep disorder with excessive daytime sleepiness as a primary symptom. Based on that and our study results, we're well positioned for our upcoming efficacy trial. In our Phase 1 trial we also observed increases in hypervigilance and insomnia, which may sound negative but actually reflect increased wakefulness and feeling energized. On alertness and drowsiness scales, baseline is about 50. At baseline in the morning, people were slightly drowsy. Throughout the day at peak, scores reached close to 90 on this scale, indicating high alertness. Energized scores increased from below 20 at baseline to well above that at peak. These are positive indications for KP1077 efficacy in IH. Now I want to reiterate the market opportunity. For rare diseases, you don't need a large sales force. You typically know who the physicians diagnosing and treating these patients are. In some ultrarare diseases, you can know every patient. Xywav was the first treatment approved for idiopathic hypersomnia. Based on various analyst reports, Xywav could have roughly $300 million in sales associated with the IH indication, based on assumptions including about 9% of diagnosed patients. This is illustrative only; we don't yet know clinical differentiation for KP1077. But assuming favorable differentiation, physicians could prefer KP1077. In Xywav studies, 75% of patients also took a stimulant medication, so that would not exclude KP1077; in fact, it could be complementary. We believe improved efficacy due to increased tolerability would position us well, supported by a favorable safety profile, C-IV control, improved cardiovascular safety, and lack of significant drug-drug interactions. Other factors that could favor KP1077 include barriers for products like Xywav such as adverse events, dosing regimen, the REMS program, and stigma associated with GHB as a therapeutic. A benefit is that Xywav's marketing and disease awareness efforts provide an opportunity for us to leverage increased awareness. Wakix is another product under development for IH; we believe there are uptake issues related to mechanism of action and potential drug-drug interactions. Looking at the other leg of our strategy focused on SDX, we're essentially building a pipeline within a pill. We've evaluated IH, narcolepsy, stimulant use disorder, and other disorders as potential routes to commercialize unique products. The stimulant use disorder program is challenging; we realized early from the study results that we would need additional partnerships. We are actively engaged with a top-tier firm to investigate government grants, government funding, and collaborations, and continue to explore industry and academic collaborations to advance that program. We believe it has value but is better suited with experts in the field. Regarding pipeline expansion strategy, we are advancing internal programs and believe we may have a lead internal candidate as early as next quarter. That would be preclinical; we still must go through IND and early clinical studies, which can be done quickly but do not advance milestones as rapidly as we'd like for value creation. Therefore, we are adding an external focus and actively seeking assets that are Phase 2 or later, Phase 2-ready or later, balanced with earlier-stage programs. We have a unique opportunity as valuations are depressed in the capital markets; we don't need a candidate, so we can be opportunistic and select the right ones. Turning to the update from Corium on AZSTARYS and our partnership: we get many questions on this. Corium has provided us a positive update. They are positive about the launch so far and have not changed what they believe they can do in the future. Based on the data we've seen, we agree. They have done the right steps to get here, perhaps a little slower than some expected. The update: they now have full national team staffing. As of a few days from now, they will have effectively doubled their sales force from 45 at year-end to 90 now, and they may add more. More important are the results: they added 700 new prescribers in the first two months of this year. Sixty of the previous ones have already written more than 30 prescriptions. Over 2,600 pharmacies have dispensed AZSTARYS; I can attest that I can easily get my prescription now. As of today, over 110 million commercial lives are covered; this does not include all of Medicaid, which we expect an update on. Two of the three largest PBMs are already in place, and if the other large one comes in, coverage will increase significantly. This is a good opportunity for KemPharm; it's our foundation and revenue, but our focus will be on developing other assets that create more value for the company. The current growth trajectory based on Corium's work leads us to believe there is potential for achieving sales milestones this year, which is within our expectations. With that, I'll turn it over briefly to LaDuane to discuss the financial position.

Thank you, Travis, and good afternoon, everyone. Travis already referenced the restructuring we completed in 2021, which has led us to a solid position of strength as we look at full year results for 2021. Q4 revenue was $2.6 million, and full year revenue was $28.7 million; both were derived primarily from royalties and consulting service fees. It is important to note that the consulting arrangement we've been under ends this month, so there may be a reduction in those fees, particularly with the recent approval of ADLARITY. We do think some consulting fees will continue as we support work related to AZSTARYS. Q4 net loss was $2.7 million, or $0.08 per share, and full year 2021 net loss attributable to common stockholders was $62.9 million, or $2.11 per share. Net operating loss for the quarter was $2.8 million, and we actually had net operating income for the full year of $7.7 million. There's a notable difference between net loss and net operating income driven by a couple of noncash items: about $54 million of a deemed dividend related to warrant exchanges and a $16 million noncash paper loss on the extinguishment of debt. Looking ahead and given the timeline and the development activity for 1077, we expect R&D expense to increase during 2022 and beyond as that program begins. Regarding the balance sheet, as Travis mentioned, we ended the year with a strong cash balance of $127.8 million. All debt has been eliminated, along with all interest expense. We put in place a share repurchase program, and details of activity will be in our 10-K to be filed later. As Travis mentioned, this puts us in a strong position: even with increasing cash burn due to development, our cash runway extends well beyond 2025, and we can fund what we need to do without needing to raise capital again. With that, Travis, I'll turn it back to you.

Yes. Thanks, LaDuane. Turning now to near-term and some longer-term milestones for KP1077, specifically for idiopathic hypersomnia. We recently conducted a Type B meeting with the agency; they were very receptive to the product concept and to the IND filing, which should happen in the second quarter of this year. We will be initiating a cardiovascular differentiation trial to compare SDX versus current methylphenidate products at high doses to distinguish safety features related to heart rate and blood pressure. We expect in the second half of this year to initiate the Phase 2 trial for KP1077 with top-line results in the first half of next year. On its heels will be KP1077 for narcolepsy and related sleep disorders, where we could have a Type B meeting and an IND filing this year, followed by initiation. As I mentioned earlier, we may add an internal candidate as soon as next quarter to our pipeline. To sum up, our focus has been on development programs, but there's a lot of value within the company based on our programs and initiatives. I mentioned the IND filing, the Phase 2 initiation, and the cardiovascular trial initiation; data from the cardiovascular trial will be available in the third quarter. Pipeline expansion will continue with internal candidates and external opportunities that are synergistic with our strategy. AZSTARYS is fully launched now; we are watching Corium's efforts and relaying their progress. We have requested, and expect, that Corium will host a joint call with us over the next quarter to provide more color on the launch. We don't want to distract them from the launch, but we hope to provide an update as soon as possible. As LaDuane mentioned, all of this is based on the fact that we have available capital and don't need to raise capital. I think that creates a very strong company and opportunity built for the future. With that, I'm ready to take any questions.

We have a question from the line of Jonathan Aschoff of ROTH Capital Partners. Your line is open.

Thank you. Congrats on the progress. I had a question about acquisitions. It's great when valuations are low when you're shopping, but how receptive are the people you're seeing out there to sell at these levels?

I think there's some receptivity. The kinds of assets we are focused on present unique opportunities because we have our technology; they can add prodrugs and extend IP runway. So it's more than just a cash transaction. We approach this strategically, and that's where our focus has been.

Along that line, I'd add that people are finding themselves in a position where capital markets are relatively dried up. If they have a good product but can't raise capital, they are more receptive to strategic opportunities.

Okay. I was wondering if you could say anything about what Corium is coming up against in the market now. I know it's only several months into the market with several drugs. Can you give us more color on what might be the biggest challenge they are facing?

I think they've overcome the biggest hurdles. The major challenge was COVID and office closures; many doctors' offices weren't fully reopened. They've adapted with other means to get touchpoints into physician offices and believe they've overcome that as they started the new year. There has been no clinical pushback; the clinical profile is well-received and patients on the product respond positively. The challenge now is building momentum and achieving payer access so there are fewer rejections.

Lastly, a simple question: do you expect operating expenses to drop a little in the first quarter, like they did last year, perhaps due to year-end heaviness in noncash stock compensation? Or will OpEx be up compared with Q4 2021?

Historically we've seen a dip in operating expenses in Q1, and it's likely to occur again. A lot of the spending related to 1077 is probably going to begin to hit more in Q2 and beyond than in Q1. So your expectation of a Q1 dip is reasonable.

Thank you. At this time, I'd like to turn the call back over to Travis Mickle for any closing remarks.

As we look forward to the rest of 2022, it's a very exciting time with a number of milestones ahead: the Phase 2 readiness and initiation plans for KP1077, cardiovascular differentiation data, potential IND filings, and pipeline expansion efforts. We have a full national launch of AZSTARYS in progress, and we'll see how our partner performs. We look forward to more interactions, updates, and details as many of these milestones are met. I appreciate your time today. Thanks, everyone.

This concludes today's conference call. Thank you for participating. You may now disconnect.