In a Jan. 25 research note, analyst Jonathan Aschoff reported that ROTH Capital Partners initiated coverage on KemPharm Inc. (KMPH:NASDAQ) with a Buy rating and a $28 per share price target. The stock is now trading at about $6.47 per share.
Florida-based KemPharm uses its ligand activated therapy technology to develop proprietary prodrugs, improved versions of approved and commonly prescribed drugs. The clinical-stage company's pipeline mostly targets attention deficit hyperactivity disorder (ADHD) and stimulant use disorder.
Aschoff highlighted that in five weeks, on March 2, a significant potential catalyst for the company will occur, the PDUFA date for its lead value driver KP415, a pediatric ADHD drug.
"A favorable label could earn KemPharm up to a $48 million milestone from partner Corium Inc.," the analyst wrote.
Aschoff described KP415 and its benefits. Thirty percent of the drug is dexmethylphenidate, which provides short-acting relief within 30 minutes. The remaining 70% is KemPharm's prodrug, serdexmethylphenidate, which extends relief for about 13 hours. KP415 comes in capsule form, allowing for varied delivery for children, such as the capsule's contents mixed into food. Another favorable characteristic of the drug is that it is abuse resistant.
Dexmethylphenidate is a gentler stimulant than amphetamine, found in Vyvnase, KP415's most likely competitor according to ROTH, among about 21 ADHD drugs on the market. A prodrug of d-amphetamine, Vyvnase provides relief within about 90 minutes. Sales of the drug were $2.5 billion in 2019.
"Despite ADHD being an established and arguably crowded market, there still exists an unmet need that even the newest drugs fail to fully address, and thus there exists an opportunity for KP415," Aschoff added.
He presented some of the other drug candidates in KemPharm's pipeline.
APADAZ is an approved, combination hydrocodone-acetaminophen drug for acute pain. The company launched APADAZ in Q4/20 with marketing partner KVK Tech.
KP484 is a pure and high dose serdexmethylphenidate ADHD drug for adults, offering extended symptom relief, of up to perhaps 16 hours. Clinical testing of KP484 is slated to start this year.
KP922 is an amphetamine ADHD prodrug for adults.
KP879 is a serdexmethylphenidate drug for stimulant use disorder, for which KemPharm filed an investigational new drug application in Q4/20.
KP1077 is a stimulant for idiopathic hypersomnia, which the company announced in Q4/20 as a new prodrug candidate.
KemPharm, Aschoff indicated, currently has about $20 million in cash.
"Our financial model projects profitability going forward," he wrote.[NLINSERT]
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Disclosures from ROTH Capital Partners, KemPharm Inc., Company Note, January 25, 2021
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
An Associated Person owns debt or equity securities of Catalyst Pharmaceuticals, Inc.
Within the last twelve months, ROTH has received compensation for investment banking services from KemPharm, Inc. and Seelos Therapeutics, Inc.
A Research Analyst and/or a member of the Analyst's household own(s) debt or equity securities of KemPharm, Inc. stock. Shares of KemPharm, Inc. may not be eligible for sale in one or more states.
ROTH makes a market in shares of Catalyst Pharmaceuticals, Inc. and Seelos Therapeutics, Inc. and as such, buys and sells from customers on a principal basis.
Shares of Catalyst Pharmaceuticals, Inc. and Seelos Therapeutics, Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.