KemPharm Inc (NASDAQ: KMPH) announced late yesterday that it has entered into a licensing agreement. Since the announcement, the stock has been screaming for the top, now up nearly 20%. Of course, the licensing agreement excited investors as it comes with plenty of opportunities to gain revenue. Today, we’ll talk about:
- The licensing agreement;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead with regard to KMPH.
KMPH Announces Licensing Agreement
As mentioned above, KemPharm is having a great start to the trading session in the pre-market hours this morning after the company announced a new licensing agreement. In a recent press release, the company said that it has entered into a definitive collaboration and license agreement with KVT Tech. The agreement surrounds commercialization rights in the United States for the FDA-approved product, APADAZ.
As a result of the licensing agreement, KMPH has the ability to get its hands on about $3.4 million in pre-launch payments and cost reimbursements. The company also has the opportunity to grab up to $53 million in milestone payments associated with specific net sales levels. Finally, net profits will be shared between the parties with royalties up to 50% based on specefied net sales levels.
In exchange for the opportunity to generate revenue, KVK has the exclusive right for all commercial, manufacturing, packaging and distribution activities for APADAZ in the United States. KVK will also be responsible for all regulatory and commercialization-related expenses.
In a statement, Travis C. Mickle, Ph.D., President and CEO at KMPH, had the following to offer:
Securing this agreement with KVK is an important step forward toward the commercial launch of APADAZ, a product which we believe offers a differentiated treatment option for the short-term management of acute pain… We believe APADAZ is now well-positioned for commercial launch since this agreement puts significant manufacturing and distribution capabilities in place and opens the door to further discussions with payers regarding the utilization of APADAZ in their health plans.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of KMPH, the news proved to be overwhelmingly positive. Not only did the company enter into a collaboration and licensing agreement, the potential milestones and royalty payments here are massive. So, this is an opportunity that may bring KemPharm to the next level. As a result, investors are pushing the stock on a run toward the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:51), KMPH is trading at $2.59 per share after a gain of $0.41 per share or 18.81% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on KMPH. In particular, we’re interested in following the commercialization efforts of APADAZ. After all, KVK is one of the world’s largest manufacturers and distributors of controlled substances and, as a partner, has the potential to bring KemPharm to the next level. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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