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A Coralville pharmaceutical company has received a $ 60-million backing from an East Coast investor to develop its promising new drug technology.

Deerfield Management Company, a New York-based health care investment firm, reached a financing agreement this week with KemPharm, a biopharmaceutical company based in the University of Iowa Research Park.

KemPharm, which has 13 employees and also operates a lab in Virginia, is focused largely on developing safer, abuse-resistant opioid pain relievers. The company has been funded mainly through Iowa investors since it was founded in 2006, making Deerfield its first institutional investor.

“Getting institutional investment capital is the hardest thing that any biotech does until they have an approved drug,” said Gordon “Rusty” Johnson, KemPharm’s chief operating officer and chief financial officer. “So this is really significant. It’s a huge validation of KemPharm and its science.”

KemPharm plans to use the financing to advance its lead product candidate, a pain treatment drug called KP201. The drug’s base chemical is hydrocodone, but unlike traditional opioids, it’s only released in the body if taken orally.

That means that if a person were to smash KemPharm’s pill and snort it, or dissolve it and inject it, the person’s body would be unable to metabolize the hydrocodone and it would have no effect, Johnson said.

Johnson called opioid abuse by those who acquire the drug illegally or through unscrupulous doctors an epidemic in the U.S., and KemPharm is taking an innovative approach in addressing that problem.

“There are multiple companies trying to come up with abuse-deterrent opioids,” Johnson said. “But the technology to date has been wrapping them in a pill that is really hard to smash, or having them in a pill that, if you mix it in water, kind of gets like Jell-O.

“But in all those cases, if you do work hard enough to crush the pill, the opioid is right there, or if you’re able to dissolve it in water, which you can do, you can get out the majority of the opioid. So they’re sort of like speed bumps, but not barriers.”

KemPharm was founded by CEO Travis Mickle, who holds a Ph.D. from UI, and his wife, Christal Mickle, the company’s vice president of corporate affairs.

In a news release announcing the Deerfield investment, Travis Mickle said the partnership will enable the “the rapid advancement of KP201 and our abuse-deterrent product pipeline.”

In addition to KP201, the company is using the same technology to develop additional drugs addressing pain, ADHD and other central nervous system diseases.

Deerfield is initially providing KemPharm with $ 25 million in financing through a secured senior convertible note and a secured senior term debt facility, the companies said. The remaining $ 35 million will become available as the company hits additional milestones.

Mark Nolte, president of the Iowa City Area Development Group, which has worked with KemPharm in the past, said the company is disproving the notion that biotech companies can’t attract major investments in the Midwest.

“There’s always been this perception that you can’t raise this kind of money in Iowa, that if you’re going to be in biotech and a company like this, you have to go to the coasts or the Research Triangle Park (in North Carolina). That’s why this is such a huge story — they’ve proven that wrong.

“The right business idea can attract the right capital.”

Reach Josh O’Leary at 887-5415 or joleary@press-citizen.com.

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