Good afternoon, ladies and gentlemen, and welcome to KemPharm Q3 2020 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 follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the conference over to your host, Mr. Jason Rando, Tiberend Strategic Advisor. Sir, the floor is yours.

Good afternoon, and thank you for joining our call today to discuss KemPharm's third quarter 2020 financial and corporate results. Before we begin, I would like to remind our listeners the remarks made during this call may contain forward-looking statements that involve risks and uncertainties, and are subject to changes at anytime, 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. For our complete information regarding forward-looking statements, risks and uncertainties can be found in 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 remarks, we will open the call to questions. With that, it is my pleasure to introduce Travis.

Thank you, Jason, and thank you, everyone for joining this afternoon. I want to run through the KemPharm highlights here on Slide 4. Just a few things of note. We continue to execute on our plan, as we've stated all along, continue to meet the obligations with our partners, continue to push forward with our NDA and development programs and continue to address the base business, including the revenue, as well as expenses and continue to work on our debt. You can see from the highlights of the last quarter and that's very much what we've done. The FDA continues to review the NDA for KP415. We have a PDUFA date for March 2 2021, which many of you are already familiar with. And to date, there's been no new safety issues – no safety issues and no substantial issues identified as far as that review of the KP415 NDA. We announced recently the expansion of a consulting arrangement with Corium, our commercial partner for KP415, as well as a collaboration intended to really launch off the APADAZ program between KVK and Sure Med. I'll discuss a little bit more in detail soon, also going to be presenting our financial results, continue to have revenue based on our services to our partner, and we see that continuing for the foreseeable future. And all of this, at the same time, while trying to address maybe the only issue left to address for us, which is our outstanding debt. Turning to the next slide. Looking more specifically at KP415. As I mentioned, there was no substantial issues or safety concerns that were raised on our last meeting with the FDA on August 13. We do have a tentative date December 1 of this year, in which we could also meet with the…

Thank you, Travis, and good afternoon, everyone. Looking ahead to Slide 8. As you know, on October 8, we announced that the company is going to hold a special meeting of stockholders to obtain authorization for a potential reverse stock split of the company's common stock. Just this past Monday, we announced that that special meeting has been rescheduled to now take place on November 17 at 8 AM via webcast. We encourage you to review the proxy statement that has been filed with the SEC for more details on how to attend the meeting, and for shareholders how to exercise your voting rights on this matter. We have received a number of questions from shareholders about the authorization of a reverse stock split, what it could mean for the company, and I hope to address a few of those today. One of the first items to again make clear is that the special meeting is intended to obtain the authorization for a reverse stock split, and not to make a reverse stock split effective immediately. If shareholders approve the authorization at the upcoming special meeting, such an authorization would be valid for up to 12 months following that meeting, and then the Board of Directors would make the determination of when to affect a reverse stock split if at all. This decision will be tied closely to our debt restructuring process, and any transaction that we seek to close would need to be in the best interest of both the company and our shareholders in order to proceed with also making a reverse stock split effective. Another important consideration is that the relevant initial listing requirements for KemPharm to relist on the NASDAQ Capital Market include that we have both a bid price of at least $4 per share,…

Thanks, LaDuane. To kind of expand and summarize from the next steps for KemPharm, as I mentioned before, we have the December 1 FDA meeting upcoming, the PDUFA date in March, up to $48 million in milestones, depending on the approval and labeling of KP415, and then we're less than a year away potentially from a launch with a highly differentiated product in a very large market with a need for a product like this. We continue to build the base business by adding revenue, addressing the debt, and now, luckily, launching APADAZ with KVK and Sure Med in the very near future. We're also looking ahead. We're looking to prepare the KP879 IND, file it as soon as reasonably possible, as well as provide you with a more detailed pipeline update in the very near future, something that we're all looking for to beyond KP415. As I hope you have been able to summarize from our presentation, we believe there is tremendous value in KemPharm. As we see it right now, a lot of that value is untapped. Just as an example, to highlight our current enterprise value demonstrates this. We are on the OTC, which is a fairly inefficient market, relative to the NASDAQ or other capital markets, in which to measure that value. And so, being able to capture that upside provide the opportunities that we need to address our debt, we need to potentially uplist, and we need to continue to execute on our plan to create that value. And ultimately, once that value is untapped, we really believe it will be in a far more meaningful way than it has been on the OTC. So that's just one example of where we see the plan, and where we think we will be going in the near future. And we'll continue to update you as we advance along. So with that, I believe our presentation is completed, and I welcome any questions you may have.

Thank you so much. [Operator instructions] Your first question comes from the line of Oren Livnat from H.C. Wainwright. Your line is now open.

Hello. Can you hear me?

Hi, Oren. Good afternoon.

Great. Making sure it’s obviously you. That’s all right. Just regarding the regulatory status of 415, can you just remind us or clue us into what is the typical type of agenda items that might be covered in the mid-cycle review versus this potential December 1, late-cycle review, if there is any difference? And, I guess what type of issues at this stage, this late review might you be coming up with? Are we just talking about labeling negotiations? Or are these really approvability issues regardless of the label? Thanks.

Just to remind – and thanks for the question, Oren. I’d just remind everybody. KP415 is actually from a regulatory perspective, under what's known as the program. So the program is the regulatory guidance that follows regarding new molecular entity. And this guidance is – program as it were, was intended to provide sponsors with the ability to get the agency feedback in a timely fashion, without waiting until the PDUFA date to find out if there was real issues on a proven space. But the mid-cycle meeting is intended to identify any issues that the agency is currently reviewing, regarding labeling, regarding study designs, whatever it may be, as well as identifying any major safety concerns that would immediately highlight this as the non-approval. So, we know from the mid-stage meeting that there was no issues regarding safety, and that issues that they were reviewing at that time, and have – kind of expanded since then were really related to things that we understood, the duration of the product and the clinical attributes, but nothing really again that was unexpected. The late-stage meeting is really the approvability meeting. So now, we'll have the opportunity to hear from the agency about their views on the safety and efficacy, and from there then they'll be working on the labeling. So again, we know this is a methylphenidate-based product. We know it was efficacious in our clinical studies, and they've already told us there's no major safety concern. So we feel, again, that this meeting will be helpful and useful to see what the agency also agrees with us. But every indication is that we're on the right track.

Okay. Separately, regarding the expanded agreement with Corium, I'm just trying to understand what that really encompasses. I mean, first of all, can you confirm that $15.6 million or up to $15.6 million, that includes whatever was remaining on the prior consulting agreement, correct? And I noticed the wording in the initial press release was interesting. It said KP415 and – or, I read it as other current or future products in the Corium portfolio. So I’m wondering, does this also involve you guys potentially working with them on portfolio products that aren't yours originally, that are – or maybe some other stuff in their hopper?

I'll try and take this question, Travis. Yes. Oren so thanks for the question. I understand why it could be a little confusing. So, in prior quarters, we have reported revenue that we had generated underneath the KP415 license agreement. It did include a provision that allowed us to essentially provide services to them on a fee quantity times price kind of basis, right? We work a number of hours. You get paid whatever. And so some of those activities were specific to KP415 commercial support, okay? So – and then – in the current arrangement then, and what we were trying to describe there is that sort of the prior arrangement under the license agreement that allowed us to provide that commercial support has really been converted into a flat fee arrangement, okay, that gives us more visibility. But that's actually the smaller piece of it. The bigger piece of it was a new arrangement with Corium, which as you just pointed out, is where they have contracted with us for our product development and regulatory services to assist them on products that they already have, either in their pipeline today, that are not related to KemPharm or other future products. And so, these products may not necessarily even be pro-drugs. It's staying because they ask us to work on to assist them. And so again, that's an expansion then of what we've been providing to Corium. And both of those work orders extend out to March 31, 2022, and so therefore provide us, the visibility to see that we’ll have revenue at least from these – there's the potential revenue up through that period.

Just to follow-up on that. Is there any change to the economics of your deal regarding milestones or royalties? And, just remind us, are there any milestones in your one or more agreements with Corium that essentially come before that PDUFA date?

Okay. So first of all, no, there was no impact or change to the milestones or any other provision of the license agreement. This really was just intended to expand the amount of commercial support and other support they would get from us. And then, the second part there, the next upcoming milestone for KP415 is related to the potential approval on the PDUFA date.

Got it. And if I may be so greedy, I ask every call, and you did speak to it earlier in the script a little bit regarding Corium potentially coming out of the shadows, so to speak, to announce themselves and KP415 to the world at least, pre-launch. And I'm just wondering you said there were a couple things making that hard to schedule, most or all of them good. So I'm wondering what our potential other than actually just scheduling things, what are potential gating factors for such a coming-out party? And are they KP415 regulatory related? Thanks.

Yes. Certainly, there's been nothing for us to update regulatory-wise, so that that wasn't the issue. Again, Corium is the organization in transition. As you would expect, they're adding a significant commercial team. And that commercial team had a lot of work to do to even prepare to get to this point. So, we wanted to provide a relevant update, something that was informed with a directionality as opposed to something that was early stage and just at a very high-level. So, I think that's what Corium and KemPharm have both decided to do that. I think we're reaching that point. Now we just have to settle on a date.

Beautiful enough. Apology for asking so many questions. Thank you very much.

Thank you, Oren.

Thank you. [Operator Instructions] Okay, I am showing no further questions at this time. I would like to turn the conference back to Travis Mickle, President and CEO of KemPharm.

I'd like to thank everybody for their time today. Again we'll continue to execute our plan, and provide updates in a timely fashion as to – as we – as it continues to unfold before us. Appreciate your time. Thanks, everyone.

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