Specialty pharmaceutical company KemPharm, Inc. amended its collaboration and licensing agreement with an affiliate of Gurnet Point Capital (GPC). The latter is a private equity firm with a focus on the life sciences and medical technology sectors.
This agreement provides an exclusive worldwide license to develop and commercialize Kempharm’s product candidates that contain serdexmethylphenidate (SDX) and d-methylphenidate (d-MPH), including AZSTARYS. AZSTARYS received approval from the FDA on March 2 for treating attention deficit hyperactivity disorder (ADHD) in patients who are six years or older.
KemPharm (KMPH) President and CEO, Travis C. Mickle, Ph.D., said, “The last few weeks since AZSTARYS was approved have been an exciting and busy time as we have worked with our partners at GPC and Corium to re-evaluate the commercial potential of AZSTARYS based on the final approved label, and negotiated adjustments to the economics of our license agreement to optimize investment in the commercial launch and, ultimately, long term value creation.” (See KemPharm stock analysis on TipRanks)
Under the amendment, KemPharm may receive future regulatory and sales milestone payments of up to $590 million for AZSTARYS along with tiered royalty payments on a per-product basis.
These royalty rates on net product sales range from a single-digit percentage to mid-twenties for U.S. sales. For each country outside the U.S these range between a percentage in low to mid-single digits of net sales.
Under the original license agreement, KemPharm was eligible to receive up to $468 million in regulatory and sales milestones.
GPC’s affiliate, Corium, Inc. is commercializing AZSTARYS and plans to make the drug available in the U.S. market in 2H 2021.
On April 9, H. C. Wainwright analyst Oren Livnat reiterated a Hold rating on the stock and lowered its price target to $10 from $12.
Commenting on the amended AZSTARYS agreement, Livnat said, “The amended agreement in our view, confirms our reservations. We believe there was a disagreement, and rather than arbitrate and potentially delay a launch, a compromise was struck.”
The other analyst covering the stock, Roth Capital’s Jonathan Aschoff has a Buy rating on the stock with a $28 price target (174.8% upside potential).
The two ratings add up to a Moderate Buy consensus rating alongside an average analyst price target of $19 (86.5% upside potential). Shares have gained about 169% over the past year.
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