KemPharm's Bold Move: Acquiring Arimoclomol from Orphazyme to Transform Rare CNS Disease Treatment Options

A Rare Disease with No Current U.S. Treatment Gains New Hope

Niemann-Pick disease type C (NPC) remains one of the most challenging rare neurodegenerative conditions facing modern medicine. This inherited lysosomal storage disorder prevents the body from properly transporting cholesterol and lipids within cells, leading to progressive accumulation of these substances in critical organs including the brain, liver, and spleen. The consequences are devastating: patients experience irreversible neurological decline affecting mobility, cognition, speech, and swallowing function. With a mean life expectancy of just 13 years and no FDA-approved treatment options in the United States, families living with NPC face an urgent and unmet medical need.

The Asset: An Oral Drug Candidate with Multiple Regulatory Advantages

Arimoclomol represents a promising therapeutic avenue for NPC patients. This first-in-class, orally-administered heat shock protein (HSP) amplifier has undergone extensive clinical evaluation, including ten Phase 1 studies, four Phase 2 investigations, and three pivotal Phase 2/3 trials. The compound has already demonstrated its clinical viability through expanded access, currently being made available to patients across the U.S., France, and Germany under Early Access Programs (EAP).

From a regulatory standpoint, arimoclomol carries significant designations: it holds Orphan Drug Designation in both the United States and European Union, plus Fast-Track Designation, Breakthrough Therapy Designation, and Rare Pediatric Disease Designation from the FDA. Should it achieve approval, the drug would also qualify for a Pediatric Priority Review Voucher, providing additional incentives for development in pediatric populations.

The Transaction: A Strategic Consolidation with Near-Term Revenue Generation

On May 15, 2022, KemPharm announced its definitive agreement to acquire substantially all assets and operations of Orphazyme—including the arimoclomol program—for a purchase price of $12.8 million in cash. The transaction structure reflects pragmatic financial planning: KemPharm will finance this payment through a revolving line of credit backed by its existing balance sheet, avoiding shareholder dilution while maintaining capital efficiency.

Additionally, KemPharm assumes an estimated liability of approximately $5.2 million, representing anticipated rebates owed to French regulatory authorities based on EAP revenue generated in France. This particular structure is notably attractive: the French EAP alone is projected to generate at least $12 million in revenue during 2022, essentially providing cash flow that partially offsets the acquisition cost.

The transaction was expected to close by June 1, 2022, contingent on customary closing conditions and approval from Orphazyme’s creditors and the Danish bankruptcy court. KemPharm committed to retaining most of Orphazyme’s existing workforce, preserving institutional knowledge and development expertise.

The Regulatory Path Forward: Building on Prior Data

While Orphazyme received a Complete Response Letter from the FDA in June 2021 and subsequently withdrew its European Marketing Authorisation Application, KemPharm’s leadership expressed confidence in a viable resubmission strategy. The company stated its intention to file a new NDA as early as the first quarter of 2023.

This approach reflects KemPharm’s track record: the company has successfully navigated challenging regulatory scenarios before, having led or participated in three FDA product approvals, two of which followed initial Complete Response Letters. By carefully evaluating the prior CRL documentation, Type A meeting minutes, and accumulated development data, KemPharm’s team identified what it characterized as a convincing efficacy signal, positioning the company to work collaboratively with FDA reviewers on pathway redesign.

Strategic Implications for KemPharm’s Pipeline

For KemPharm, this acquisition significantly broadens its rare CNS disease portfolio. The company’s existing pipeline includes KP1077, a lead clinical candidate for idiopathic hypersomnia, alongside the already-commercialized AZSTARYS® (for ADHD) and APADAZ® (an immediate-release pain management combination), both built on KemPharm’s proprietary LAT® (Ligand Activated Therapy) platform technology.

The addition of arimoclomol offers multiple strategic advantages: it provides an NDA-stage product with existing revenue-generating mechanisms, enables the company to establish and scale commercial infrastructure, and creates potential for positive cash flow generation while building shareholder value. The rare disease focus aligns with KemPharm’s established expertise and market positioning.

Patient Impact and Medical Community Response

Marc Patterson, MD, Professor of Neurology, Pediatrics, and Medical Genetics at Mayo Clinic, provided clinical perspective: “NPC is an ultra-rare, inherited neurodegenerative disease affecting individuals from infancy through adulthood, resulting in progressive impairment of essential functions and premature mortality. Therapies addressing NPC remain desperately needed, and continued advancement of candidates like arimoclomol offers meaningful hope to patients worldwide managing this disease daily.”

This sentiment underscores the fundamental value proposition: in an ultra-rare disease category with no current U.S. treatment options, moving a clinical-stage candidate with established safety and efficacy data toward commercialization represents a significant public health opportunity.

Timeline and Company Leadership Perspective

Richard Pascoe, KemPharm’s Executive Chairman, characterized the transaction as “a transformative event” that substantially expands the company’s development pipeline while introducing an immediately revenue-generating asset. The financial structure—combining the relatively modest upfront payment with existing EAP revenue and capital-efficient financing—was presented as creating opportunity for positive cash flow accumulation without diluting shareholder ownership.

Travis Mickle, Ph.D., President and Chief Executive Officer, emphasized the strategic rationale: the acquisition directly supports KemPharm’s core mission of advancing novel rare CNS treatments. By assuming responsibility for arimoclomol’s regulatory resubmission and potential commercialization, KemPharm gains leverage to build out commercial capabilities that could serve the company’s broader pipeline while addressing an acute patient need.

The company’s confidence in regulatory feasibility—planning for NDA resubmission in Q1 2023—reflects both the strength of existing data and KemPharm’s demonstrated capability in managing complex regulatory situations.

The Broader Context: Rare Disease Development Dynamics

This transaction illustrates evolving dynamics in rare disease pharmaceutical development: assets with strong regulatory designations and early commercial traction command acquisition interest from companies positioned to navigate regulatory complexities and establish commercialization infrastructure. For a company in financial reconstruction like Orphazyme, strategic asset sales to better-capitalized acquirers offer mechanisms to maximize value for creditors and stakeholders.

For patients and the NPC community, the transfer of arimoclomol to a company with demonstrated regulatory experience and clear commitment to resubmission represents tangible progress toward treatment availability—a critical milestone in addressing one of neurology’s most challenging rare disorders.