Good day, ladies and gentlemen, and welcome to the KemPharm's Third Quarter 2018 Corporate Update Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded. I'd now like to turn the conference over to Josh Drumm of Investor Relations. You may begin.

Thank you, Sonia. Good afternoon and thank you for joining our call today to discuss KemPharm's Q3 results and recent corporate and product development highlights. Before we being, I would like to remind all of 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 on this call are made pursuant to the Safe Harbor provisions of Federal Securities Laws. Information contained in the forward-looking statements is management's beliefs based on current expectations and is subject to change and actual results may actually differ materially from forward-looking statements. KemPharm is not under any obligation to update such factors or to announce publicly any revisions to any forward-looking statements based on future circumstances, except as required by law. More complete information regarding forward-looking statements, risks and uncertainties are available in the reports KemPharm files with the SEC. These documents are available at KemPharm's website at www.kempharm.com under the Investor Relations section, and we encourage you to review these documents carefully. Speaking on today's call will be Travis Mickle, KemPharm's President and Chief Executive Officer; LaDuane Clifton, CFO; and Rusty Johnson, Chief Business Officer. Following the remarks, we will open the call to your questions. With that it is my pleasure to introduce Travis Mickle.

Thanks Josh, and welcome everyone, and thanks for joining us today. As a quick intro and as many of you already know, KemPharm is especially a pharmaceutical company focused on the R&D related to prodrugs. The core team here at KemPharm has been working on prodrugs upwards of 20 years together. One of our most notable accomplishments was the discovery and development of the product VYVANSE, which is Shire's $3 billion plus market leading ADHD product. All of this occurred when we were all together at the New River Pharmaceuticals. The last four months have been truly shown what our technology and team can do and are perhaps the best four months of progress I've seen at any company at our stage. In that span of time, we have announced a commercial partnership for our product APADAZ, a technology partnership with twoXAR to explore therapeutic areas outside of our focus, as well as expand our potential of our LAT prodrug technology. Host of the foremost experts on ADH and abuse to discuss the area and we closed a very strategic financing to position us for bigger and better things in the future. We continue to advance our lead assets rapidly and that was highlighted by the positive results from our efficacy study for KP415, showing onset of action at 30 minutes lasting up to 13 hours. We also completed our human abuse potential program with the collective data surpassing even the best prodrug data I have seen in my experience. With these key studies completed, we are now pleased to file the NDA as soon as the first quarter of next year. We announced last week, the commercial license of APADAZ Abbott as to KVK. And we believe and think that KVK would agree that APADAZ has the real potential…

Thank you, Travis, and good afternoon. As Travis mentioned, we completed an underwritten public offering of our common shares in early October. We issued approximately 8.3 million shares of common stock at $3.00 per share and received net proceeds of approximately $23.2 million. The offering was strategically timed with the goal of improving our balance sheet to potentially strengthen our negotiating position with various potential partners initially for APADAZ and now for those interested in KP415 and DP484. Pro forma shares outstanding after the offering was 24.4 million. Now to turn to our third quarter results. For third quarter 2018, KemPharm report of a net loss of $15.1 million or $0.94 per basic and diluted share compared to a net loss of $10 million or $0.68 per basic and diluted share for the same period in 2017. The net loss in Q3 2018 was driven primarily by a loss from operations of $18 million, net interest expense and other expenses of $1.6 million and partially offset by non-cash fair value adjustment income of $4.5 million. The $18 million operating loss increased by $8.4 million compared to last year's third quarter operating loss of $9.6 million. The increase was primarily the result of an increase in R&D spending of $7 million, severance expense recognized during the quarter of $1.6 million and partially offset by a decrease in general and administrative expenses of $300,000. As of September 30, total cash investments which is comprised of cash, cash equivalents, restricted cash and marketable securities was $14.1 million. This represented a decrease of $15.2 million compared to June 30, 2018. The increased cash burn rate was due primarily to the timing of accounts payable and it is not expected to continue at that level. Combined with a net proceeds from the offering of $23.2 million, pro forma cash investments was approximately $37.3 million. Based on our current operating forecast, existing resources are expected to fund the operating expenses and capital expenditure requirements into but not through the third quarter of 2019. Our current forecast projects a cash burn rate of between $10 million to $13 million a quarter, but we are continuing to evaluate the impact of the recent APADAZ license agreement on our cash runway, including the benefit of some of the responsibilities, now have been shifted to our partner KVK. We expect that the actual burn rate may be lower. So now with that, I'll turn the call back over to Travis.

Thanks LaDuane. Looking forward, we see several high value milestones upcoming including a potential strategic partnership for KP415 and KP484, NDA filing for KP415 and clinical studies as well as results for KP484. Additionally, we do plan as I discussed on the KVK call last week, to move one or more prodrug candidates from our R&D team into our pipeline. Please wait for these announcements over the coming weeks or months. So that makes the question. What is next? We have accomplished so much over the last four months but the work has just begun. We still have ongoing product development but at the same time we are working diligently to secure terms of a partnership with the goal of accomplishing this by year-end. Due to the fact that this is a structured process with defined timelines, we don't expect something sooner. But at the same time, it also allows us to be able to project a potential completion date. We're also working with KVK, to launch APADAZ as soon as possible, as well as securing those plans to drive demand. As you can see, we believe that there are a number of big catalyst for the company in front of us. We also believe that you can see, we're now starting to demonstrate really what we can do here at KemPharm. At this point, that concludes our presentation, I can ask if there's any questions.

Thank you. [Operator Instructions] Our first question comes from Randall Stanicky of RBC Capital Markets. Your line is now open.

Hi, guys. This is Daniel Busby on for Randall. A few questions. First on KP415, can you provide any more broad color on how those discussions are going? I know you said it was a structured process. And does your confidence level in getting a deal done before year-end remained unchanged based on those discussions?

I can't really provide any additional color because again we're within that process and certainly we don't want to indicate anything positive or negative to potential partners. But we still remain as we have in the past, we believe that this is an attainable goal, and we're working diligently to achieve it.

Okay. And a follow-up on that. Do you have a date for your pre-NDA meeting with the FDA and KP415? And is that anyway a getting faster to getting a deal done? I guess put differently, do commercial partners want to hear FDA's feedback before committing to anything?

Not aware that anybody has made that requirement. We don't have a date security, we have a general time line, so I've heard nothing to that nature.

Okay. And is that still expected to be before year-end or shortly thereafter?

I believe best we can do right now is probably first quarter, so early first quarter.

Okay. And then switching gears to APADAZ, realizing it's still early, but can you show any initial feedback from the channel on your deal with KVK. Have you noticed a difference in conversations now they have proven partner on board for supply and distribution?

Well, that's really now KVK's area to comment on and lead forward. We'll be collaborating with them certainly helping them to get the product off the ground. But there's several steps that we have to undergo before that sort of discussion in detail what happened. So I still see that there's a lot of interest. I think the announcement of the deal will catalyze those discussions. But I can't give any more specifics because it really is KVK's product.

Okay. That's fair. And then just one last question on pipeline, let's assume for the moment that you do reach a partnering deal for both KP415 and KP484 later this year, that more or less passes off your responsibility for those products. So I know you alluded to potentially bringing something into the clinic next year. But is there any more color you can share on how you're thinking about that and kind of what your priorities are in terms of bringing more products forward?

Yeah, well if KP415, KP484 do get partner, we don't see that as the end of our development. So certainly now it becomes a commercial product for another company and they will be working diligently to get the product approved with us, but we would still lead that development effort given our knowledge base and really resources here focused entirely on that effort. Beyond that, where we were two years ago with the KP415 was we just opened an IND. So functionally, you can see we're able to advance several products very, very rapidly through the development process and we hope again that we're going to have high value opportunities in front of us and as we'll bring forward and those would also be advanced more than likely with similar timelines.

Okay. Great. That's helpful. That's it for me.

Thank you. [Operator Instructions] Our next question comes from Henry Zal [ph] of Esther Rajavelu Oppenheimer. Your line is now open.

Hi, there. This is Esther Rajavelu. I just wanted to clarify on APADAZ, are you or KVK managing discussions with PBMs and payers?

KVK is the commercializing party, so anything that we do would be funneled through them. So a lot of our discussions today have been through KemPharm but now that the agreement is done, they lead all efforts.

Got it. So that milestone payment that you're expecting when a deal gets done with the payers, that's really kind of that timeline is really determined by them rather than your team?

As I described on the call last time, KVK is driving the bus but at least we're backseat driver in this case. So well I do have to defer to their leadership and their timing. We have the relationships in place, so we'll be working actively with them to get them across the goal line.

Got it. Thank you very much.

Thank you. And ladies and gentlemen, this does conclude our question-and-answer session. I would now like to turn the call back over to Travis Mickle for any closing remarks.

Thank you. In closing, I'd like to thank you for your time and interest and we intend to build upon these initial successes to bigger and better things. Have a great rest of your evening or afternoon. Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.