Ladies and gentlemen, thank you for standing by and welcome to the KemPharm 4th Quarter and Year End 2020 Results Conference Call. At this time all participants are in a listen-only mode. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Mr. Jason Rando from Tiberend Strategic Advisors. Thank you. Please go ahead, Sir.

Good afternoon, and thank you for joining our call today to discuss KemPharm's fourth quarter and full-year 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 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.

Thanks Jason, and thanks everyone for joining this afternoon, this evening. I wanted just to quickly provide some updates, really just recaps what we've discussed over the past few months. Here, I think most of our questions that we received and most of the focus will be around the financial position of the organization since now we're able to actually report that out. So, I think the focus of today's call will center around very much so the financial position of the organization. So, to sort of start out, of course hopefully every single person is aware that's on this call are will be listening to the FDA approval of our product AZSTARYS last week. That is of course partnered with an affiliate: Gurnet Point Capital. And the commercial partner in that case is also Corium. Under the license agreement we're eligible to receive regulatory sales based milestone totally up to $468 million and also includes Tier growth years up to the mid-20s. These milestones are broken up into various amounts but it included an approval in a core sales based milestones. Corium has issued a press release regarding the approval of AZSTARYS. I encourage you if you want to hear a little more from them on the product. Please, seek out their press release to read more about AZSTARYS. Updates on the partnership again we've entered into a consulting agreement with Corium on other projects other than KP415/AZSTARYS. This provides us additional revenue. And we have of course our ongoing collaboration with KVK Tech and for the launch of APADAZ in the private program there that just launched in Alabama. Greatly improved financial position, I will let LaDuane really talk through all of this. I think everybody on the call listening can see the tremendous turnaround from a year ago, two years ago even before that. And I'll let him go through that in detail.

Thank you Travis, and good afternoon. As we've spoken about already a couple of time, certainly we are pleased and excited to report that the multi-phase financial restructuring process has been completed. This was the culmination of a series of transactions that began at least Q4 but really went back last year but really went back even further than that. And the result has been pretty astonishing. We were able to pull together a string of transactions which culminated in growth proceeds of approximately $94 million, the KemPharm. This allowed us to regain our listing on the NASDAQ Capital Market back in January. We eliminated all of the company's debt as of February 8th. I'll probably be talking about that for the rest of the year just because it really is a major accomplishment for the company given the years that we've been under that debt really since pre-IPO. And we've added substantial new capital to propel the company's growth efforts. We position with a great balance sheet now, significantly extended runway and frankly it's a brand new company with a whole different set of strategic options available to us for the future. Specific to the Q4 2020 financial results, we reported revenue of $2.4 million for Q4; that's primarily composed of services revenue under our Corium consulting arrangement and other consulting arrangements and compare that to Q3 and you can see that was about $0.5 million more than the prior quarter. We reported net loss of $4.9 million or about $1.07 per basic and diluted share compared to a net loss of $6 million or $2.90 per basic share for the same quarter in 2019. Our operating loss for Q4 2020 was about $3.2 million and that is an improvement of $1.2 million by comparison to the same quarter in Q4 '19. This was primarily driven by an increase in the revenue as well as a decrease in our operating expenses during Q4 2020. And you can see here R&D expenses at $3.1 million, G&A expenses at $2.5 million. Essentially here, you can see that we are maintaining our same expense posture as we have been since 2000 -- since our adjustments to the cost structure in 2019. Turning now to the full-year 2020 financial results, we had full-year revenue of $13.3 million for 2020. This was primarily services revenue as well as we received regulatory milestone revenue of $5 million which was at the NDA acceptance last May of the KP415 now AZSTARYS NDA. Compare that to 2019 revenue about $12.8 million. Net loss for the full-year was $12.8 million or $3.21 per basic and deluded share compared that to a net loss in the prior year of $24.5 million or $13.23 per basic and diluted share for 2019.

Alright, thanks LaDuane. And we do -- we are taking a little bit of a unique format this time with color we just had and so many questions coming in from our 100s if not 1000s of shareholders. We want to address as many of those as possible. We're also addressing questions from analysts. So, we've collected those questions ahead of time, able to kind of consolidate and precisely have those in a form that we can explain. I did want to mention that if we didn’t answer a question that you had, it's either because it was answered in something else in the presentation or we plan to address that in some other form or it's just something we can't talk about because it's a confidential business discussion. It's something that maybe we don’t have all the information on whatever it is. It's a very valid reason. We want to tell you everything we can. We have to tell you everything is legally responsible to do. So, please these questions are just a piece of what we've heard but I think it represented of everything that we feel are is important for everybody to know as well as many things that you should know.

So the first one. Really goes off for what you've already spoken about LaDuane. Can you clarify the number of fully deluded shares outstanding after the restructuring?

Yes. So, I just spoke to that a moment ago that, that number again is 38.6 million fully deluded shares. And that's inclusive of then more it's a 9.6 million. It includes preferred stock that was issued. Again, that really every element of the recent transactions were included in that number.

Okay. Well, the next one really is very similar. It's can you clarify the number of warrant exercise not exercise. This one's a little bit different as well as the current market cap and the cash position.

Right. So, in the press release we tried to provide this detail too. So, with regard to the number of warrants exercise, to-date or as of yesterday, 12,281,000 warrants have been exercised and converted into a 11.8 million shares of common stock. The reason for that difference is primarily that in some cases warrants were exercised on a cash list basis. So, it result in the less shares being issued but a large majority was actually incremental cash that came in the company into the company which is included in the cash balance I mentioned of $76 million. And then, of course warranty already exercise -- or excuse me, that remain to be exercise is the 9.6 million that we talked about. Our current cash position $77.6 million again we've already talked about that. And then, current market GAAP, I guess if you base it on today's calls were just 998. And where we do in the map right now and you would assume I guess the 28.4 million approximately shares outstanding is your market GAAP.

Thanks, LaDuane. The next one is more of a general question. I think I covered a part of it. A lot of folks are trying to understand the commercialization plans that Corium has and of course any updates that they have provided. The first one and kind of related to that is to launch to expected. I believe I've covered that. Of course my belief as well as I think there press release and in the press release we -- that they reviewed that we issued, all states as such. So, there is nothing to the contrary. I think as far as any detail, the best sources are going to find for that is located in the presentation that Corium and KemPharm get together. That's found in the past event section of our website. It's a full transcript there, you go read it, see the slides, it's actually very well done. And so, I think that's going to be your best resource. Nothing has changed from that other than the fact that we believe we have an excellent label perhaps the best-in-class label. When you talk about ADHD products. And that just means its all-the-more valuable and important to do our very best. We've done some questions where you stood, shareholders what is the status/process of scheduling with the DEA. Some of you may recall hearing me speak about in the past. The DEA's required to issue a preliminary schedule decision for the prodrug SDX Serdexmethylphenidate 90 days after approval. Now, that is based on a recommendation that's sent from the FDA to the DEA. At this time, that remains a confidential recommendation and at such time is that its final determination is made we will be happy to pass that along to our shareholders and potential investors.

And Travis, to be clear, that's 90 days from when?

From approval date, March 2nd, yes. I'm really glad we have this format actually, we're somewhat better. The next question was submitted from one of our analyst. This one I think is on a lot of people's mind, so we're happy to spend some time here. Your market capital is currently very near, was it for the successful PDUFA date. How do you account for what I view is a clear disconnect between the current evaluation and the potential value to KemPharm from the recent AZSTARYS approval. Well, I certainly won't pretend to understand all the ins-and-outs of the public markets and of course everybody has an opinion whether it's good bad or indifferent. What I would really encourage everybody to do and I can sit here and tell you the great things that I believe are imparted in the label for AZSTARYS, I can tell you what I know about the ADHD marketplace what the needs are. I can tell you personally what my needs are and those are my children. But what I can do is fully convince you of exactly what the value is because I've said all these things multiple times. So, what I encourage here is go and look at the label for Concerta and Focalin XR. These are two of the most best tried products in this methylphenidate base phase. Take those labels and put them side-by-side with AZSTARYS and look for things about height and weight. Look for things about onset and duration, look at the different graphs that are included in there. Look about sprinkling and prodrug profiles and pharmacokinetics and just look at the differences and you'll be able to tell I believe that there are major differences from these two very valuable products. Both Concerta and Focalin XR are right…

One thing I would add, I -- in one of the questions that we had sort of summarized here, so almost curious if they are specific to first dose or first prescription or sort of I would just say we have very simple milestone structure. It's simply based on achieving certain sales Tiers. So again, we can't disclose the exact amount of those Tiers but there's nothing fancy. When you achieve X dollars in sales for a year, you achieve certain milestone. So, that's very simple. If we're able to bring KP484 to approval, it gets added into and have the effect of taking AZSTARYS sales plus KP484 sales and then you kind of reach each Tier, arguably you would probably reach it sooner because now you got two products contributing sales. So, it's a very simple milestone model.

Very good point. Or is there anything else who believe I missed on that question?

No, I think you covered well. I think the way I think about it, I know when we saw the data from 2018 sales I believe it is of Focalin XR and Concerta. Focalin XR, again on a label book to label comparison, there is amazing differences in terms of benefits to patients potentially for AZSTARYS. And Focalin XR had around $350 million in sales, approximately 2018. Similarly, Concerta. Again this is as generic had sales in the proximal range of around $500 million. So, just wanted to print numbers on that. You combine those two products, you're approaching $850 million to $900 million in sales. Okay, and again making that label comparison, what do you think AZSTARYS would be able to do with Concerta and Focalin in our generic position was able to get those kind of sales. So, that's a CFO's way of saying peak market share seems to not be well-understood. I believe, that's my guess.

Right. And one point I do want to make certainly here. We're the developer, we're trying to convey as best as we can with differentiation of the product. That's why we're both encouraging to go and look at the label, we're not going to making promotional claims, we are not a regulatory agency, we're not claiming to be the FDA. So, Corium has a lot of work to do because the label literally just came out and while they -- I'm sure they predicted certain things. At the same time I'll tell you, there's surprises in this label that are great surprises. So, it did take some time, it takes some work but ultimately I think we're in being in an agreement this is a great product. It will do very well. And ultimately I think it's under just highly underappreciated. So, the last question is a little more strategic and also from one of our analysts. KemPharm is completely transformed its balance sheet since year-end '20 with debt dropping from $65 -- roughly $65 million. He dint have the exact number apparently to zero. And cash as far are then it was back then. How should investors be thinking about KemPharm's Capital Deployment. And you're looking at any new assets to potentially acquire?

I think there's actually several parts to answer. Of course, the financial transformation I mean LaDuane talking about our current market cap. At one point last year as sitting as an OTC company, we had a market cap below $15 million to go to that to a $280 million market cap. And this is meaningful in many different ways including access to additional mutual funds, additional new investors, shareholders, just visibility, credibility, the list goes on-and-on about what that can mean to an organization, have a meaningful market cap. But at the same time, we've removed the debt overhang the $67 million that we owed was less than the $48 million approval milestone that would have been avail -- that is available to us. And so, you start to do the math, you worry about market conditions. That was just a huge transformation. So, I can't undersell that and certainly it really proves the commitment we have to continue to add value for shareholders. When we think about the capital deployment as we look forward, this is where we get very excited. It look, we've got this transformational product, so we are going to optimize it. If we were commercial party, we would be out there really doing everything we can. And all of your questions be directed well; what about market access; what about pricing; what about your salesforce; how big is that going to be. I can't tell you any of that except Corium. They're a private company, they don’t have to tell me. They'll have to tell me and they really don’t have to tell the public. But at the same time I'm very convinced that they know exactly what they're doing and we'll do the very best because they have all the incentive in the world…

No, I would say not only is it what Travis and I view but of course together with our board this strategic direction the strategic focus on what's next is it going to be I think a very important conversation. It's something that we talk about on an ongoing basis but I can't say enough how the new balance sheet really now makes us have real conversations about what's possible what's next. So, this will be ongoing discussion and I think over the next several months throughout the rest of the year just on an ongoing basis we'll do our best to provide update as we make progress in this area. So, I appreciate the question, frankly it's really the right direction to be thinking about.

Alright. With that we don’t have any more questions that we can for this time allotted.

Again I will reiterate the Roth Conference, again there is a link to register and listen to the full current management presentation. Hopefully can answer few more questions. I think all your financial updates can be found here. So, certainly this is the best resource for that. At the same time I really want to thank everyone for your time. The intense interest in and excitement around the approval, that all those great things are still present in the company. So, I thank my shareholders and appreciate everyone's effort.

Okay, thank you. And operator, with that we will conclude today's call.

This does conclude today's conference call. Thank you, for participating. You may now disconnect.