Coralville-based KemPharm this week announced it has entered into a license agreement with KVK Tech Inc. for U.S. commercial rights to its FDA-approved prodrug, Apadaz.

Under the deal terms, KemPharm is eligible to receive up to an estimated $3.4 million in pre-launch payments and certain cost reimbursements. They include $2 million upon achievement of a specified milestone related to the initial formulary adoption of Apadaz, and up to $53 million in milestone payments tied to specific net sales levels. In addition, net profits will be shared between KemPharm and KVK up to 50 percent, based on achieving certain sales levels. 

KVK has the exclusive right to all commercial, manufacturing, packaging and distribution activities for Apadaz in the United States and will be responsible for all regulatory and commercialization-related expenses. In addition, certain pre-launch expenses, including the costs of active pharmaceutical ingredients and other materials for manufacturing, validation batches, inventory investments and other launch costs, will be shifted from KemPharm to KVK.  

KemPharm and KVK will continue to collaborate on pre-launch activities, including outreach and plan adoption by pharmacy benefit managers (PBMs) and managed care organizations (MCOs) for the exclusive use of Apadaz as an alternative to existing hydrocodone/acetaminophen products.

As one of the largest controlled substance manufacturers in the United States, KVK Tech has the capacity to produce more than 3.5 billion tablets annually, and a plan for expansion that would boost its capacity to more than 15 billion tablets by 2020. The hydrocodone/acetaminophen market currently represents nearly 5 billion tablets dispensed annually in the U.S.

"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," KemPharm President and CEO Travis Mickle said in a news release. "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."