Janney Buys Into KemPharm Ahead Of 'Transformative' Summer Catalyst

KemPharm Inc KMPH has struggled to gain traction since its 2015 initial public offering, but one long-sidelined analyst is ready for action.

The Rating

Janney analyst Ken Trbovich initiated coverage of KemPharm with a Buy and $17 price target.

The Thesis

Janney anticipates a “transformative catalyst” in the late June or early July release of Phase 3 data on a new ADHD therapy.

“For years, I tracked KemPharm as it struggled to eventually gain FDA approval of its first prodrug for pain, but we expect value creating events are coming soon from its efforts to develop a prodrug version of d-methylphenidate for treating ADHD,” Trbovich said in a Wednesday note. 

Considering the prodrug’s previously demonstrated efficacy, the analyst calculated high odds of positive Phase 3 outcomes.

If approved, the treatment could become the first ADHD stimulant bearing an abuse-deterrent label given its positive and upcoming results in comparative studies for “drug liking." 

For Trbovich, the only point of caution for KemPharm is its balance sheet.

“While we see this as being of little concern if the data is positive, it could be extremely challenging if it is not." 

Price Action

KemPharm shares were up 8.2 percent at the time of publication midday Wednesday. 

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