KemPharm Inc (KMPH) builds on repurposing molecules

ADHD and More

While attention-deficit/hyperactivity disorder (ADHD) has a huge market, there has not been a new and improved therapy in the ADHD world in more than a decade — until now.

If KemPharm’s KP415 is approved by the FDA on March 2, it will mark the first major improvement since the launch of Vyvanse in 2007, according to Bill Mitton, an Iowa-based investor. In 2003 the ADHD market was $2.3 billion. That market in 2024 is estimated to be $24 billion, with a year over year increase. Vyvanse was discovered by Travis Mickle and a team of young scientists at a company called New River. It was an amphetamine-based stimulant with perceived lower abuse potential. Vyvanse was picked up by Shire for $2.6 billion.

“Vyvnase has been a blockbuster for Shire and in fact, has been its top return-on-investment cash cow, since its inception,” Mitton said.

However, fast forward to today. KemPharm, with the same Travis Mickle, now at the helm as CEO, along with the same team of scientists, anticipates that lightning will strike twice. The team has discovered a methylphenidate-based stimulant with properties that will propel it to be the category leader in a very short period of time, according to Mitton. “KemPharm believes it has developed a superior drug to the team’s original discovery of Vyvanse,” he said.

The data for KP415 support the claim of a 30-minute onset of action, a smooth plasma profile and up to 13-hour duration. Anyone living in a household with a member or members afflicted with ADHD, knows how much of a vast improvement a 30-minute onset would be when compared to up to 90 minutes. That means the medication would be working by the time children are getting dressed and ready to go, instead of kicking in when they are dropped off at school. In addition, the 13-hour duration would be a lifesaver. It would allow the child to finish dinner and homework, without the need of having a booster medication later in the day.

“Those attributes, along with less sleep disruption, a smooth efficacy curve and a HAP (Human Abuse Potential) comparable to a placebo, should make this a certain first-in-class drug.” Mitton explained. “Also, being a methylphenidate, which is preferred as a first choice in adolescents, is an asset.”

He added, “We all know that having the product is key, but you also have to have a team that can effectively ramp up the distribution in order to be a blockbuster. More than a decade ago, Vyvanse was picked up by Shire. Shire had an ‘ace team,’ led by Perry Sternberg, that did a superb job in commercialization.”

KemPharm had in fact, been working with this same team at Shire in regard to KP415. That team knew the category inside and out. The team also had a decade-long working relationship with Dr. Mickle. Both KemPharm and the “ace team” at Shire assumed that Shire would be taking on the new and improved KP415 to succeed Vyvanse that would be coming off patent in 2023. However, Shire was unexpectedly taken over in a $62 billion buyout by Takeda Pharmaceutical. The members of the experienced CNS team that had worked with Vyvanse and Dr. Mickle in the past, were all moved out of the company, being displaced by Takeda transplants.

As “luck” would have it, all five of this all-star CNS team coalesced at Corium Pharmaceutical, a subsidiary of Gurnet Point Capital. GPC is owned by Ernesto Bertarelli, a Swiss billionaire. Bertarelli comes from a family well known in the pharma world. In 1996, he succeeded his father as head of Serono. In 2007, the company was acquired by Merck to form Merck Serono. Bertarelli, who has continued his focus on the healthcare industry, has publicly stated that Corium/GPC intends to be the next “Shire” of the world in the CNS category and is making every move to be just that.

Corium, under the leadership of Perry Sternberg, now has the same commercialization team that was so successful in taking Vyvanse to market. Many of the key people in the Shire CNS category have recently been hired by Corium. Territory managers and detail people are quickly being hired across the country. Corium/GPC seems to be going “full steam ahead in filling out an extensive and experienced CNS department,” Mitton said.

After KP415, KemPharm will have KP484, which will be a much longer acting form of the same molecule, with once-a-day dosing intended for adults. In addition, KP922 will be an amphetamine prodrug in an IR and ER form. That will give KemPharm exposure on both sides of the stimulant aisle, methylphenidate and amphetamine, for use in ADHD therapy.

Moreover, KemPharm has just received FDA approval to start trials on its IND for KP879. This molecule is going to be developed in hopes of treating Substance Use Disorder (SUD).

“SUD is a devastating epidemic in our country with Meth and Cocaine addiction,” Mitton explained. “KP879 would be the first and only agonist replacement therapy available to those suffering while withdrawing from these horrible drugs.”

KemPharm should hear from the FDA by the end of February on the classification of priority review, fast track and orphan drug designations for KP879. This category could dwarf even the ADHD segment of business. Being an ultra-dose of the same molecule in KP415, many of the studies already done will have crossover ability, streamlining the timeline.

Financially, KemPharm has never ever been in a better position. Over the last few months, the company has gone through a reverse split, up listed from the OTC market to the NASDAQ and paid off all debt. After the anticipated approval, KemPharm will have a little over $100 million dollars in the bank with ZERO debt. The company also has a very lucrative partnership deal with Corium. KemPharm will recieve in total $493M in milestone payments, related to KP415 and KP484 and royalties on U.S. net sales of up to 25%, and royalties on ex-U.S. net sales of up to 9%. Mitton believes that KemPharm has positioned itself to be “a prime buyout candidate or a strong successful go-it-alone entity. The choice is now entirely in KemPharm;s hands.”

Mitton added that “KemPharm’s pride and joy is its ability to develop new drugs on the back of others’ work and money.” The company does this by utilizing the 505(b)(2) pathway. It takes existing drugs already on the market and investigates how to make significant improvements. Those improvements could range from onset or duration, ability to be abused or a whole host of other parameters. This technique of improving can be used across the entire spectrum of therapeutics, so the possibilities are endless. It actually has been called a “license to steal” by some. The company can piggy-back on the data and dollars that have been invested by others, to develop a brand new molecule that will get full patent protection.

Mitton concluded, “It is akin to the Golden Goose that will just keep laying golden egg after golden egg. Dr. Mickle has stated that ‘given sufficient funds, he doesn’t have enough life left, to develop all of the possibilities.’ This is perhaps the most valuable asset that KemPharm possesses.”