Executive Summary / Key Takeaways

• Zevra Therapeutics is executing a focused transformation into a commercial-stage rare disease company, leveraging strategic acquisitions and its proprietary technology to address significant unmet needs.
• The recent launch of MIPLYFFA for Niemann-Pick disease type C (NPC) has exceeded initial expectations, driven by strong clinical data demonstrating halted disease progression and successful conversion of Expanded Access Program patients, positioning it as a potential cornerstone therapy.
• The sale of the Rare Pediatric Disease Priority Review Voucher (PRV) for $148.3 million in April 2025 significantly bolstered Zevra's financial foundation, providing ample non-dilutive capital to fund strategic priorities and extending the cash runway.
• While the OLPRUVA launch for urea cycle disorders (UCDs) has faced initial hurdles, Zevra has refined its commercial strategy to target specific patient segments where the product's differentiated formulation offers greater benefit, showing early signs of traction.
• Zevra is actively curating its pipeline, exploring strategic alternatives for the Phase 3 ready KP1077 asset and investing in the Celiprolol Phase 3 trial for vascular Ehlers-Danlos syndrome (VEDS), focusing resources on late-stage opportunities with the greatest value potential.

A Rare Disease Transformation Underway

Zevra Therapeutics, Inc. is undergoing a deliberate transformation, evolving from a development-focused entity into a commercial-stage biopharmaceutical company singularly focused on addressing the profound unmet needs within the rare disease community. This strategic pivot, symbolized by the company's 2023 name change to Zevra (Greek for zebra, the rare disease symbol), is built upon a foundation of strategic acquisitions and a commitment to data-driven development and commercialization. The acquisitions of assets related to arimoclomol in 2022 and Acer Therapeutics (ACER) in 2023 were pivotal, bringing approved products and late-stage candidates into the portfolio and establishing the necessary infrastructure for commercial operations.

Operating as a single segment dedicated to the research, development, manufacturing, and sale of innovative rare disease therapies, Zevra's strategy centers on leveraging specialized expertise to overcome complex challenges inherent in this space. The company aims to maximize the potential of its current and future products by targeting highly specific patient and healthcare professional communities. This focused approach is intended to drive commercial excellence and build a sustainable business with reliable cash flows.

The Technological Edge: Ligand Activated Therapy and Prodrug Innovation

Central to Zevra's approach, particularly within its pipeline, is its proprietary Ligand Activated Technology (LAT) platform. This technology is designed to create prodrugs, chemically modified versions of approved or known drugs, intended to improve their pharmacokinetic, pharmacodynamic, or safety profiles. The core idea is to enhance the therapeutic benefits and potentially mitigate some of the drawbacks associated with the parent drug.

A prime example of this is serdexmethylphenidate (SDX), Zevra's proprietary prodrug of d-methylphenidate, which serves as the active pharmaceutical ingredient in KP1077 and is a component of the partnered product AZSTARYS. SDX is designed for controlled release, aiming to provide a steady therapeutic effect over time. Notably, SDX has been classified as a Schedule IV controlled substance by the DEA, potentially offering a reduced abuse potential compared to Schedule II methylphenidate products commonly used off-label for conditions like idiopathic hypersomnia (IH). This differentiated profile, aiming for improved safety and potentially more consistent symptom management, represents a key technological advantage for Zevra's pipeline candidates utilizing this platform. While specific quantitative metrics on improved PK/PD profiles or manufacturing cost advantages compared to non-prodrug alternatives are not detailed, the strategic intent is clearly to create products with superior characteristics that address specific patient needs and market gaps.

Navigating the Competitive Currents in Rare Diseases

Zevra operates within competitive landscapes characterized by established players and the unique challenges of rare disease markets. In the Niemann-Pick disease type C (NPC) space, Zevra's recently approved MIPLYFFA faces competition from IntraBio's AQNEURSA, which was approved after MIPLYFFA. Zevra positions MIPLYFFA based on its clinical data demonstrating halted disease progression through 12 months and extensive long-term patient experience from its EAP and open-label studies, aiming to establish it as a cornerstone therapy.

For urea cycle disorders (UCDs), Zevra's OLPRUVA competes with established therapies like Amgen (AMGN)'s RAVICTI and Medunik USA's PHEBURANE. Zevra differentiates OLPRUVA through its novel formulation designed to improve palatability and offer portability with single-dose envelopes, addressing unmet needs related to adherence and ease of administration. The competitive landscape for rare neurological sleep disorders like IH and narcolepsy, targeted by Zevra's KP1077, includes Jazz Pharmaceuticals (JAZZ) with products like Xyrem, Harmony Biosciences (HRMY) with Wakix, Avadel Pharmaceuticals (AVDL) with Lumryz, and Supernus Pharmaceuticals (SUPN) with various CNS therapies. While direct quantitative market share figures for Zevra against these larger players in overlapping segments are not detailed, Zevra's strategy focuses on its prodrug technology (SDX) to offer potentially differentiated safety and dosing profiles compared to existing methylphenidate-based treatments (often Schedule II).

Financially, larger competitors like TICKER:JAZZ and TICKER:HRMY exhibit higher gross and net margins (TICKER:JAZZ TTM Gross Margin ~89%, Net Margin ~14%; TICKER:HRMY TTM Gross Margin ~78%, Net Margin ~20%) compared to Zevra's TTM Gross Margin of 78.84% and significantly negative TTM Net Margin (-226.64%) reflecting its earlier commercial stage and R&D investments. Zevra's TTM revenue growth has been strong (~40-50% based on recent annual reports), outpacing some larger, more mature competitors, but its smaller scale and higher relative R&D spend contribute to lower profitability metrics and a higher debt-to-equity ratio (1.51 TTM) compared to TICKER:HRMY (0.27 TTM) or TICKER:SUPN (0.03 TTM). Zevra's competitive positioning relies on its ability to identify and successfully commercialize therapies for niche rare disease populations where its technological advantages and focused commercial infrastructure can provide a meaningful edge against broader portfolios or less differentiated offerings.

Commercial Momentum Builds with MIPLYFFA Launch

The most significant recent operational achievement for Zevra is the FDA approval of MIPLYFFA on September 20, 2024, marking it as the first approved treatment for NPC. This milestone triggered the commercial launch and the receipt of a transferable rare pediatric disease PRV, which was subsequently sold for $150 million gross proceeds ($148.3 million net) on April 1, 2025. This non-dilutive capital infusion dramatically strengthened Zevra's balance sheet, providing substantial financial flexibility.

The early performance of the MIPLYFFA launch has been promising. As of March 31, 2025, Zevra reported $17.1 million in MIPLYFFA net revenue for the first quarter, a substantial driver of the overall $20.4 million in net revenue for the period, which represents a significant increase compared to $3.4 million in the same quarter of 2024. The company received 122 prescription enrollment forms from launch through March 31, 2025, including 13 in Q1 2025, indicating a broadening patient and prescriber base beyond the initial Expanded Access Program (EAP) cohort. The conversion of all active U.S. EAP participants is expected by the end of Q2 2025, well ahead of initial timelines. Market access efforts have resulted in 38% of covered lives as of Q1 2025, with the team successfully navigating initial reimbursement hurdles through direct formulary coverage or medical exceptions, leveraging MIPLYFFA's robust clinical data.

Refining the Approach for OLPRUVA

The launch of OLPRUVA for UCDs, initiated in early 2024, has presented challenges, with management acknowledging it has progressed slower than desired. Q1 2025 saw $0.1 million in OLPRUVA net revenue and 5 new prescription enrollment forms, contributing to a total of 28 forms since launch through March 31, 2025. This follows de minimis revenue in Q3 and Q4 2024, partly impacted by a specialty pharmacy transition and a $3.2 million inventory obsolescence reserve recognized in Q2 2024.

In response to market feedback regarding low patient awareness and reimbursement hurdles, Zevra refined its commercial strategy in Q3 2024. The focus is now on targeting specific patient segments, particularly adult and OTC deficient populations, who may benefit most from OLPRUVA's portability and ease of administration. While management notes early signs that this refined strategy is gaining traction, they anticipate it will require additional quarters to gain significant momentum due to the low frequency of physician visits for these patients. Market access for OLPRUVA stands at 78% of covered lives as of Q1 2025, and the company continues efforts to improve formulary positions.

Strategic Portfolio Curation and Pipeline Advancement

Zevra's strategic plan includes a disciplined approach to pipeline and innovation, focusing resources on assets with the highest potential. A comprehensive portfolio review in Q3 2024 led to the discontinuation of certain programs (e.g., osanetant) and the decision to halt in-house discovery efforts to prioritize late-stage development and commercial opportunities, with plans to outsource early-stage activities. This rationalization continued into 2025 with the withdrawal of the APADAZ NDA and the out-licensing of pre-clinical IP for an upfront payment and potential future milestones/royalties.

The company is actively advancing its key pipeline candidates. Celiprolol, in Phase 3 for VEDS patients with a COL3A1 mutation, saw recruitment restart in mid-2024. As of March 31, 2025, 32 patients were enrolled in the event-driven DiSCOVER trial. Zevra is implementing strategies, including focusing on specialized clinics and genetic testing programs, to accelerate enrollment in upcoming quarters, encouraged by significant patient interest reflecting the high unmet need in VEDS. For KP1077, a Phase 3 ready asset for IH and narcolepsy with Orphan Drug designation for IH, Zevra is exploring strategic alternatives to advance its development and commercialization. This decision, following positive Phase 2 data and clear FDA guidance, reflects a strategic assessment that maximizing KP1077's value may be best achieved through partnership, given the broader commercial footprint required for these indications compared to Zevra's core rare genetic/metabolic focus.

Financial Strength and Outlook

Zevra's financial position has been significantly strengthened. As of March 31, 2025, the company held $68.7 million in cash, cash equivalents, and investments. The subsequent $148.3 million in net proceeds from the PRV sale on April 1, 2025, provides substantial non-dilutive capital. This is in addition to approximately $64.5 million in net proceeds raised from an underwritten public offering in August 2024 and a new $100 million credit facility secured in April 2024, from which $60 million was initially drawn. Total long-term debt stood at $60.09 million as of March 31, 2025.

The company's operating cash burn for Q1 2025 was $8.2 million, a decrease from $16.2 million in Q1 2024, reflecting increased revenue offsetting higher commercial expenses. The decrease in R&D expenses ($3.3 million in Q1 2025 vs $12.3 million in Q1 2024) was primarily due to the completion of the KP1077 Phase 2 study and lower personnel costs, while SG&A expenses increased ($19.5 million in Q1 2025 vs $9.9 million in Q1 2024) due to the build-out of the commercial organization.

Management's guidance, as of the Q4 2024 report, indicated a cash runway extending into 2029, explicitly excluding the PRV proceeds but incorporating anticipated revenue from commercial products and collaborations. This guidance underscores the company's improved financial health and ability to fund its strategic priorities.

Key risks remain, including the outcome of the litigation regarding the AZSTARYS License Agreement, which could result in significant legal expenses and impact the relationship with the commercial partner. The ability to attract and retain key personnel is also critical. Geopolitical and regulatory developments could potentially impact global operations. Furthermore, while liquidity is strong, the concentration of cash in major financial institutions carries inherent risk.

Conclusion

Zevra Therapeutics is executing a clear strategy to become a leading patient-focused rare disease company. The successful early launch of MIPLYFFA, driven by compelling clinical data and effective commercial execution, provides significant momentum and validates the company's targeted approach. Bolstered by the substantial non-dilutive capital from the PRV sale, Zevra is well-positioned to invest in its commercial growth and advance its curated pipeline. While challenges remain with the OLPRUVA launch and the need to find strategic partners for assets like KP1077, the company's focus on high-impact opportunities, supported by its technological capabilities and strengthened financial foundation, underpins the investment thesis. The outlook is centered on driving continued commercial success for MIPLYFFA, realizing the potential of the late-stage pipeline, and exploring opportunities for further growth, all aimed at creating long-term value for patients and shareholders.