Aquestive Therapeutics, Inc. (NASDAQ:AQST) Q1 2024 Earnings Call Transcript

Aquestive Therapeutics, Inc. (NASDAQ:AQST) Q1 2024 Earnings Call Transcript May 8, 2024

Aquestive Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, and welcome to Aquestive Therapeutics First Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call will be recorded. I would now like to introduce your host for today’s conference call, Bennett Watson of ICR Westwicke Investor Relations. You may begin.

Bennett Watson: Thank you, operator. Good morning, and welcome to today’s call. On today’s call, I’m joined by Dan Barber, Chief Executive Officer; and Ernie Toth, Chief Financial Officer, who are going to provide an overview of recent business developments and performance for the first quarter 2024, followed by a Q&A session. During the Q&A session, the team will be joined by Dr. Stephen Wargacki, Chief Science Officer. As a reminder, the company’s remarks today correspond with the earnings release that was issued after market close yesterday. In addition, a recording of today’s call will be made available on Aquestive’s website within the Investors section shortly following the conclusion of this call. To remind you, the Aquestive team will be discussing some non-GAAP financial measures this morning as part of its review of first quarter 2024 results.

A description of these measures along with a reconciliation to GAAP can be found in the earnings release issued yesterday, which is posted on the Investors section of Aquestive’s website. During the call, the company will be making forward-looking statements. We remind you of the company’s safe harbor language as outlined in yesterday’s earnings release as well as the risks and uncertainties affecting the company as described in the Risk Factors section and in other sections included in the company’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 07, 2024. As with any pharmaceutical company, with product candidates under development and products being commercialized, there are significant risks and uncertainties with respect to the company’s business and the development, regulatory approval and commercialization of its products and other matters related to operations.

Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as of the date made. Actual results may differ materially from these statements. All forward-looking statements attributable to Aquestive or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements and the cautionary statements contained in the earnings release issued yesterday. The company assumes no obligation to update its forward-looking statements after the date of this conference call, whether as a result of new information, future events or otherwise, except as required under applicable law. With that, I will now turn the line over to Dan.

Dan Barber: Thank you Bennett, and good morning everyone. It has been only 64 days since our last earnings call, yet the company has been largely transformed over those 64 days. To be specific, since our last call, we have announced positive Phase 3 results and a positive FDA interaction for our lead product candidate, Anaphylm epinephrine sublingual film, raised over $75 million in new capital from high-quality investors, and received FDA approval for Libervant diazepam Buccal Film for the treatment of seizure clusters in patients aged two to five years. We have realized these accomplishments while also progressing the company’s long-term growth initiatives. This was truly a remarkable 64 days for the company. For me and for all of the members of the management team, it is gratifying to reach the other side of the transformation we have been planning for over the last two years.

We continue to rapidly progress Anaphylm in the clinic. As we previously shared with you, we have three supportive studies to perform before our adult application is ready for filing with the FDA. We refer to these as our temperature/pH, study, our self-administration study, and our allergen exposure study. I am pleased to say that our temperature/pH study is well underway and remains on track to complete dosing this quarter. We submitted our protocols for our self-administration and allergen exposure studies to the FDA with a request to receive responses within 45 days. We were pleased to receive positive comments back from the FDA in less than 30 days. We are now in the process of commencing both studies. We currently expect to complete all three studies before the end of the third quarter.

Our current guidance is that we will be able to provide clinical results from at least a portion of these studies by our second quarter earnings call in August. We have provided more details on each of these studies in our supplemental materials, which can be found on our website. We may seek to conduct our pre-NDA meeting with the FDA upon completion of these studies and before conducting our pediatric study. This may save us valuable time in the development process. Under this scenario, our pre-NDA meeting could occur around the end of the third quarter. As we progress towards our filing, we are also spending more time on identifying the optimal distribution model for Anaphylm. As we all know, distributing medication in the pharmaceutical industry is a complicated process and requires significant preparation.

Unfortunately, for caregivers and patients, it is often complex to navigate and result in many unanswered questions. Will my medication be covered? How much will I owe? Can I afford it? What if I lose my medication and need to replace it? These are common questions that are faced by millions of Americans every day. Over the coming months, we will spend a significant amount of time with payers and market access experts so that we understand optimal strategy for Anaphylm where it belongs in the hands of patients. This is an area of our industry that is ripe for innovation and, if practical, we will seek to help drive change. We have also begun to work on typical launch activities such as packaging design, marketing materials, and sales force planning.

We have hired and engaged a variety of key commercial experts and we will continue to build this part of our business throughout the year. Now let me turn to Libervant. As you heard me say last week, we were pleased to obtain FDA approval and market access for the two to five year old patient population. We have already begun the process of obtaining commercial and government reimbursement and we continue to fill non-Medicaid prescriptions as they are received. Similar to Anaphylm, we continue to examine our distribution model for Libervant. We have a very concentrated call point that can be managed through a small internal team. As time goes on, we expect to either expand our internal team or collaborate with other sales and marketing organizations to expand market access for these young patients.

There are over 55,000 prescriptions filled every year within the two to five year old population and this number continues to grow. We are excited to finally provide the first and only FDA-approved oral medication for the rescue treatment of seizure clusters to this very important patient population. In fact, early feedback from healthcare providers and caregivers has been very positive. One healthcare provider told us that her families were going to be “so happy” to no longer have to use the rectal gel. And another healthcare provider told us that she was extremely excited because many daycare centers were refusing to administer the rectal gel. We continue to progress our Adrenaverse platform with our AQST-108 program, our epinephrine prodrug topical gel.

We completed our first human clinical study in the first quarter and the data remains promising. This initial study measured the amount of epinephrine that remained on the skin or was found in circulation over time after application of the gel. While we are not releasing the data for competitive reasons, we found the results compelling enough to continue our product development efforts. We expect to be back in the clinic over the summer and continue to aim for providing more information on this program in the second half of the year. Our base business remains steady. First quarter shipments were significantly higher than the first quarter of last year. To sum it up, I have never been more excited about the prospects of the company. We have great technology, an experienced management team, and a growing track record.

These are the basic building blocks necessary to be successful in our industry. I believe we will continue to progress from our transformation phase and into an emerging growth story. For the balance of the year, we expect to announce clinical data from the Anaphylm supported studies on or before our second quarter earnings call in August, expand our distribution capabilities to ensure maximum on-label patient availability for Libervant, advance the clinical development of AQST-108 as rapidly as we can, and continue to efficiently manage our base business. With that, I will turn the call over to Ernie.

Ernie Toth: Thank you, Dan, and good morning, everyone. By now you will have seen our financial results in our earnings release that was issued last evening. As we typically do, we will address most of the discussion related to the first quarter 2024 results in the Q&A. During the first quarter, we continued to execute on our financial strategy to strengthen our financial position by raising capital that extends our cash runway and supports the continued development of our lead product, Anaphylm, the first and only non-device-based orally-delivered epinephrine product candidate. In March, we closed an underwritten public offering of 16.7 million shares of our common stock at the public offering price of $4.50 per share. The underwriters purchased approximately 600,000 shares of common stock to cover over-allotments in the offering on April 22nd, 2024, bringing the total gross proceeds to the company from the offering to approximately $77.5 million before deducting underwriting commissions and other offering expenses payable by the company.

All of the securities were sold by the company. We intend to use the net proceeds from this offering together with our existing cash and cash equivalents primarily to advance the development and commercialization of our product pipeline, including Anaphylm for the treatment of severe life-threatening allergic reactions including anaphylaxis, and Libervant for the treatment of seizure clusters in epilepsy patients aged two to five, and for working capital, capital expenditures, and general corporate purposes. This capital will provide the company cash runway into 2026. We are pleased this offering included high-quality institutional healthcare investors. These investors’ willingness to be part of our future represents another important step forward in the continued growth of Aquestive.

Also, on April 3rd, 2024, the company filed a new prospective supplement to register the offer in sale of up to $250 million worth of shares of common stock pursuant to the amended equity distribution agreement under a self-registration statement on Form S-3. The company also established a new ATM facility for $100 million as part of this self-registration statement to replace the company’s prior ATM facility, which expired in April 2024. We consider both the new self and the ATM facilities as good corporate financial planning and have no current intentions to utilize either of these facilities in the foreseeable future. Now let’s turn to the first quarter results. Total revenues increased from $11.1 million in the first quarter 2023 to $12.1 million in the first quarter 2024.

This 8% increase in revenue was primarily driven by higher revenue from our out-licensed products. Excluding the one-time retroactive 2022 price increase of $1.7 million recognized in the three months ended March 31st, 2023, manufacturing and supply revenue increased by 30%, primarily due to an increase in Suboxone and Sympazan manufacturing revenues offset by lower Ondif revenue. In addition, license and royalty revenue increased by 23%, primarily due to higher royalty revenue for Azstarys from Zevra and for Sympazan from Assertio, co-development and research fees decreased by 11% for the first quarter 2024 versus the prior period. Research and development expenses increased from $3.5 million in the first quarter 2023 to $5.9 million in the first quarter 2024.

The increase in research and development expenses was primarily due to the continued development of the Anaphylm program. As a reminder, the first three quarters of 2024 will contain expenses from multiple clinical studies being conducted to advance the Anaphylm program. Selling, general and administrative expenses increased from $7.5 million in the first quarter of 2023 to $10.7 million in the first quarter of 2024. This increase was composed of $1.7 million in one-time expenses related to severance and higher share-based compensation, as well as the effects of a year-over-year change in the allocation of expenses to manufacturing and supply costs. Given this year-over-year change, we expect to continue to see a positive benefit in gross margin offset by somewhat higher SG&A expenses.

Excluding these items, there was a modest increase in SG&A compared to last year. Aquestive’s net loss for the first quarter 2024 was $12.8 million, or $0.17 for both basic and diluted loss per share, compared to the net income for the first quarter of 2023 of $8.1 million, or $0.15 basic earnings per share and $0.11 for diluted earnings per share. The change in net loss was primarily driven by the one-time $14.5 million of other income, which was recognized in the first quarter 2023, and increases in selling, general and administrative expenses, research and development expenses, and non-cash interest expense related to amortization of the debt and royalty obligation discounts. Non-GAAP adjusted EBITDA loss was $7.2 million in the first quarter of 2024, compared to a non-GAAP adjusted EBITDA loss of $3.9 million in the first quarter of 2023.

Non-GAAP adjusted EBITDA loss, excluding adjusted R&D expenses, was $1.4 million in the first quarter of 2024, compared to a non-GAAP adjusted EBITDA loss, excluding adjusted R&D expenses, of $0.5 million in the first quarter 2023. Cash and cash equivalents were $95.2 million as of March 31, 2024. Under the companies at the market, or ATM facility, we accessed approximately $12 million during the first quarter of 2024. We continue to be focused in 2024 on the advancement of our Anaphylm epinephrine program, with a goal of following the NDA for Anaphylm before the end of 2024. We are also in the process of reviewing our existing collaborations to prioritize our focus on the promising products from a long-term profitability perspective. We will have more to say on this after the second quarter of 2024.

As outlined in the press release issued last night after market close, our outlook for 2024 is as follows. Total revenues of approximately $48 million to $51 million and non-GAAP-adjusted EBITDA loss of approximately $22 million to $26 million. Our guidance for 2024 includes focused R&D investments related to the continued development of Anaphylm, the first and only non-device-based orally-delivered epinephrine product candidate, but excludes any revenue or expenses for Libervant following the recent FDA approval for patients ages two to five. With that, I will now turn the line back to the operator to open the line for questions.

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Q&A Session

Operator: Thank you. Our first question comes from David Amsellem with Piper Sandler. Your line is open.

David Amsellem: Thanks. I wanted to pick your brain on the competitive landscape in the epi space. So there are a number of intranasal products, as you know, that are moving through development and wanted to get your thoughts on how you’re thinking about not just the payer landscape in the context of a more crowded landscape, but also just patient and practitioner preferences for nasal spray modality versus an oral film modality. So that’s number one. And secondly, on Libervant, any more color and how you’re thinking about the future of that product, whether you’re looking at more fulsome commercialization down the road or partnering it out, just help us better understand where your heads are at on that product. And then lastly, you mentioned the partnerships, and you’ll have more to say. I guess, does that mean that you’re looking to sort of monetize these income streams? So I’m just trying to get a better sense of what you meant by that. Thanks.

Dan Barber: Morning, David. Good to hear your voice. So, yes, in terms of the competitive landscape for epinephrine, I will admit I have lost count of how many intranasals are in development, so – but I know there are a number of them. But as far as I’m aware, and what gets us excited and where we think we are unique, is we are the only oral, we are what we believe is a very portable product, and we’re the only products that I’m aware of that is biocomparable to the autoinjectors for the first 30 minutes following administration. This is for a rescue product designed to save someone from anaphylaxis. So I don’t know how many nasal sprays are in development, but I do know I have a very differentiated product that we’re very excited about.

So when I look at the market research and survey work that we do, we do the same work all companies do, there absolutely is, in our view, a difference in how patients and caregivers view our product versus medical devices, right? So our portability clearly shines through, as does our speed, the speed of being able to access the product, the speed of being able to give the product, the speed of the epinephrine concentration in your blood and getting to Tmax in 12 minutes. All of those things in our mind are major differentiators that are important as we go forward. In terms of the payer landscape, we are, as I said in my prepared comments, we are clearly doing a lot of work on the payer front. Our findings to date, which match what we’ve said in the past, is that payers understand this is a rescue space typical to other rescue spaces.

And as long as your pricing is within the envelope of existing pricing, we do not expect those dynamics to change. So as other branded intranasal products come into the market, we don’t see those dynamics changing in. And as I said in the past, we would expect the market as the waters settle over the next few years to have a component that stays autoinjectors for whatever reason, have a component that is intranasal that the intranasal products fight it out for, and then have the component for oral. And in our particular view, we believe the oral part of the market will be a major, if not the major part of the market. In terms of Libervant, I have to tell you, we couldn’t be more delighted with where we are right now. To have Libervant finally in the hands of patients, it is just such a great feeling for the management team here.

And quite frankly, Libervant, which sometimes gets lost in the shuffle with Anaphylm, Libervant is really valuable. And not only is it valuable to patients and caregivers who only have a rectal gel they can use right now, but it’s valuable to us as the company who has created the product. So where we stand right now, nothing’s changed from my prior view. The most important thing with Libervant is to get it in the hands of patients. We are happy to work with other sales and marketing organizations if they can help us to get it in the hands of patients. But I will say the one spot we will not compromise on is performance. So if we do license Libervant to another company, we will expect them to convert the 55,000 scripts that are currently rectal gel users into film, because that’s what patients and caregivers need.

If they’re unable or unwilling to commit to that level of performance, we will do it ourselves. So I think probably the question that comes up next is, well, what does that mean, do it ourselves? Well, quite frankly, as we sit here today, we are doing it ourselves. We do have individuals who are talking with physicians and working on bringing scripts through – of our Libervant product. Ultimately, if we were to keep it, I continue to believe this is a very concentrated small team of people. Think of it as a dozen, ten people, not overly large, and that’s not sales reps, that’s sales reps and all of the support pieces. And we do believe that a majority of the 55,000 scripts could be converted by that small team. So when you think of it from just a financial term, obviously that is, well, it’s nowhere near the Anaphylm opportunity.

It is meaningful. So your last question was on monetizing the income streams. In my view, I think it’s a little early for that. We have work to do in both cases. So with Libervant, while there is a possibility we out-licensed it, and I suppose you could say that comes with some dollars and do that as monetizing, I view that as more of a finding someone to help us have the breadth of ability to bring the products to patients. In terms of Anaphylm, we are very focused on the next 90 days. We have an execution plan ahead of us. We know what we need to do. And that is where our focus will be. In terms of things like monetization, that will be later.

David Amsellem: Great. That’s helpful. Thank you.

Operator: Thank you. Our next question comes from Francois Brisebois with Oppenheimer. Your line is open.

Francois Brisebois: Hey, thanks for the question. So, I was just wondering if you can comment on the allergen test. Now, that seems to be the requirement and the cancellation of the angioedema test that you initially thought you would have to run. Is that – is that helpful? Just, can you help us just contextualize what that means to the company if it’s easier or harder? And angioedema in the real world, how common do you see this with anaphylaxis here? Thank you.

Stephen Wargacki: Good morning, Frank. Good to hear your voice. Yes, I’m glad you brought up this topic, because in our view, there appears to be some confusion out in the world around edema and what is experienced by someone going through the process of anaphylaxis. So edema – the onset of edema with anaphylaxis is a cascade, right? So it starts as a tingle, it starts as a change that an individual may feel. And, of course, if you allow time to go by it will progress and get worse. And that’s not just in the oral cavity that can be manifested in other parts of the body, nasal cavities, many parts of the body. So when we think about angioedema, we think about the need to dose quickly, right, which is exactly what our study will allow us to show.

In our allergen exposure study, we will expose individuals to whatever oral allergen syndrome they have, so cherries, mango, kiwi, whatever it may be. And the individual will work with the clinician to say what level of discomfort they are feeling. And we will then dose our products and, of course, track the pharmacokinetic profile of that product. So that’s going to, in our minds, show what a real-world experience looks like, right. As we’ve talked about in the past, you’re sitting there, you think you may have had something, your feeling is tingling, something is progressing, and then you take our product. What we don’t believe is realistic or something that happens in the real-world on any regular basis is the extreme edema that I know has been shared in other settings.

That’s just not the experience we hear from KOLs and experts. So we think the FDA did a very good job and we are very pleased with the way they worked with us to say, don’t do an angioedema study where you are trying to create this false level of swelling, instead, show people what it really looks like in the real-world. So we’ll have a patient-based study, right. These are patients who will be in the allergen exposure study. So we are excited to get that going and we’ll have more to say about that over the next few months.

Francois Brisebois: Thanks. And then if I could just squeeze in one last one here, in terms of Anaphylm, obviously, gigantic market, how does a company your size, can you just talk about a little bit, I know you’re doing a lot of work right now on this, but what can you share about commercial prep and maybe sales rep side and what kind of docs are you going after here? Thank you.

Stephen Wargacki: Yes. Yes, I think that’s another – as we learn more, and especially now as our balance sheet is appropriately sized, I think, size is a misnomer, right. We believe that a relatively modest sales force, and as I’ve said in the past, somewhere between 80 to 100 reps is a great place to launch this product. Not only that, while the entire market is spread across a lot of call points, because there is a general GP component of this, if you target allergists and pediatricians, the top five deciles can be targeted with 80 to 100 reps. So when I look at our nasal spray competitors and how they are approaching the market, I think, everyone has a similar approach. And I don’t think that you have to be a big, multi product pharmaceutical company to attack this market. This is perfect for a company of our size.

Operator: Thank you. Our next question comes from Ram Selvaraju with H.C. Wainwright. Your line is open.

Ram Selvaraju: Hi. Thanks very much for taking my questions. Firstly, with respect to the timeline for the submission of the Anaphylm NDA, based on your current objectives, with respect to the pre NDA meeting, can you confirm whether you still expect to submit the NDA before the end of this year, or if it’s possible that it could slip into next year simply because of the lag between concluding the pre-NDA meeting and completing the final pediatric study?

Dan Barber: Sure. Good morning, Ram. And I am glad you brought that up because there was, in our prepared remarks and in the supplemental materials we’ve given, we did show everyone something a little different than last time. And I want to make sure we’re clear with everyone what that difference is. We believe – so before, we had laid out a plan where we would do all of our studies and then go have our pre-NDA meeting. Looking at it now, we actually think it’s much more efficient for both us and the FDA, given that we’re moving so rapidly through the three supportive adult studies, we think it’s more efficient for everyone if once those three studies wrap up, we just have our pre-NDA meeting. And why? Because we want to show that data to the FDA anyway before starting the pediatric study.

So why not just turn it into your pre-NDA meeting? Especially since the pediatric study is a very straightforward study. We are literally giving one dose to a child between the ages of seven and seventeen who is over 30 kilos. And that’s it. So is it possible that things change? Of course. That’s our industry, right? Who knows? But our guidance, our goal, our focus remains exactly like we said it was before filing, by the end of this year. And we’ll do that by having a pre-NDA meeting at the end of our supportive studies and then doing the very straightforward pediatric study that we’ve laid out.

Ram Selvaraju: Okay, that’s helpful. And then secondarily, with respect to all of this discussion around the commercialization of Anaphylm and the likely sales and marketing infrastructure that would be necessary, can you comment on the following two things? Firstly, what kind of promotional effort do you anticipate is likely to be most applicable here? Let’s say in the hypothetical scenario where Aquestive launch of Anaphylm independently, is it digital marketing driven? Is there any meaningful DTC through traditional channels? What does that look like, just frame that for us if you can? And secondly, this may be a question for Ernie. The financial guidance that has been promulgated, particularly with respect to the length of your current cash runway post, the most recent raise, does that actually factor in both pre-launch as well as launch activities related to Anaphylm? Thank you.

Dan Barber: Sure, Ram. So also, a great question and something that’s really important to highlight for everyone. When you look at the launch of this product, and we have, by the way, done a considerable amount of effort over the last 90 days to start bringing in some commercial expertise, make some changes in our commercial organization, to be ready for Anaphylm, as well as bring experts around us. So, obviously, I’m sure Ernie will at some point in the discussion here, talk a little bit about expenses. But that’s where we are spending our money, right, on R&D and commercial for Anaphylm. So having said that – so we spend all this money to build a commercial infrastructure, what are they going to do, right? And that is a – when you think about the 20-year span of this product being on the market, there is several phases.

The first phase, so the first couple of years of launch, the very straightforward, obvious place to focus are on these scripts that exist, right? So the healthcare providers who are writing scripts to patients today. So I am sure just like our competitors, that’s where our focus will be, right? Converting those existing low hanging prescriptions to Anaphylm. As time goes on, as our brand is established, yes, of course, there will be more of a digital, direct-to-patient advertising component, but that is not what you do. In our view, day one. Day one is about the existing base of the second phase is about the expansion of the market. I will let Ernie give you his thoughts on your expense question.

Ernie Toth: Good morning, Ram. So I think you are referring to our mention of our cash runway based on the recent capital raise of where that would get us and we stated that that would get us into 2026. So though we haven’t given specific guidance for 2025, both our 2024 guidance, what we expect to spend in 2025 will dozen and get us into 2026 on that cash does include some anticipated spend on pre-commercial activities this year, more around the payer perspective, and then next year of an increased spend to be prepared to launch the product.

Dan Barber: So, Ram, let me just add to what Ernie said and just put a finer point on that. We have plenty of money right now. We’re very happy with our balance sheet right now. And as Ernie said in his prepared remarks, while we have an ATM in place, we are not using it right. So we think we are well set up for what we need to execute upon, and we think that fits us not just to our approval, but past our approval and into the launch phase. And at that point, obviously, there is a lot of different parts of our business we will have to see how things go over the next two years.

Ram Selvaraju: So if I could just sneak in one more thing with respect to optimizing the value of Anaphylm as an asset, how do you see the picture changing outside of the United States, particularly given where you currently are with the product, all the clinical data that has already been generated? What are you seeing in terms of potential partnering interest or other opportunities to potentially optimize the value of Anaphylm as an asset looking at ex-U.S. territories?

Dan Barber: Ram you are absolutely right. We think Anaphylm is a global product, and we think there are a variety of places where – let me even take the word right, we think on a global basis, anyone who can have access to Anaphylm we think will benefit. When we look at the ex-U.S. markets, there is a few dynamics going on, right. So let’s take China. China right now is just not a good market for, I believe, I’ll make a macro statement of our industry in general pharmaceutical products, it’s just not only the geopolitical world, but the pricing world is not a good place. So I don’t think you’ll see us focus on China. Europe, however, is a very different story. We have done the work and we do believe Europe is a bigger opportunity than perhaps we had previously thought.

So, we do have business development activities going on in Europe. I think the timing remains to be seen. I will admit I don’t think our competitors have done us any favors in that regard because their products have struggled a little bit in Europe on the regulatory side. So I think we need to be clear with our story and make sure we’ve positioned ourselves correctly. But ultimately, I do believe Europe will be important to us.

Ram Selvaraju: Thank you.

Operator: Thank you. Our next question comes from Jason Butler with JMP Securities. Your line is open.

Unidentified Analyst : Good morning, this is Joseph [ph] for Jason. Thanks for taking our question. Just a very quick one follow-up, clarifying question. Is a pediatric trial needed for approval, or do you plan to include the safety data from the study to FDA during the NDA review for the temperature/pH trials? We’re just wondering what you’re expecting to share. And lastly, on the topical product, do you also need to look at the potential of accidental exposure to another person, whether it’s another subject, a healthcare provider or family member? Thank you.

Stephen Wargacki: I apologize you were very soft coming through. I think I captured some of it, but not all of it. I heard you asked on the temperature/pH study when – what our thoughts are on sharing data. I heard you ask on the topical product, I think a sizing question about what the opportunity looks like. Did I miss one of the other questions?

Unidentified Analyst : For the topical product if you need to look at the potential exposure or accidental exposures to another subject or a healthcare provider.

Stephen Wargacki: You catch that? Okay, well, let me, I apologize, I am just not quite hearing it. But I will give you my thoughts on what I think you asked. So, on the temperature/pH study, yes, we will share that data. I think the timing of when we share is what we need to clarify with everyone. And that’s why we gave guidance today that definitely at the Q2 earnings call in August, if not earlier, we will share the clinical data that we have. But I think the important thing to remember around not just the temperature/pH study, but the three supportive studies is unlike the Phase 3 pivotal study this is not a pass fail series of endpoints. This is comparison work, right? So we are comparing. We are showing in the temperature/pH study, as an example, what our curves look like, single dose, after a variety of different liquids are administered.

You can actually see the liquids in the supplemental materials we gave. So while we – don’t expect any differences, even if there are differences, we think that all we’re doing is quantifying those differences so that it’s complete in our NDA. So these three supportive studies, we think, are exactly that supportive. So we’re excited to share that data in the future. In terms of the AQST-108 topical gel product, I know we haven’t shared a lot of information on this product yet. We do plan to in the second half. But I will tell you, we are very excited about being able to penetrate the skin with an epinephrine prodrug. We think that opens up a host of opportunities that is very meaningful. If your question on exposure was around absorption, I think, we will have more to share in the future.

Does that capture a reasonable amount of your questions?

Unidentified Analyst : Yes. So I am in exposure as an accidental transference to another patient, another subject, or a healthcare provider, since it…

Stephen Wargacki: Got you. Okay. Yes, so, with any topical gel, transference is always something you have to manage. Right? So we would be no different than any other topical gel that is on the market today. What we would expect to be no better, no worse than all of the other topical gels, which, as you know, is a substantial market.

Unidentified Analyst : Very helpful, thanks.

Operator: Thank you. Our next question comes from Gary Nachman at Raymond James. Your line is open.

Gary Nachman: Thanks, guys. Good morning. So, first on Anaphylm and just a follow-up, I think, it was just asked but not answered. So on the pre-NDA meeting and the pediatric study, is there a scenario where you would file for just adults without that pediatric study, or is it just a question of confirming the design of that pediatric study that you laid out? I am assuming seven to seventeen is a big portion of the market that you need in the filing.

Stephen Wargacki: Yes. Good morning, Gary. I will admit to being disappointed you didn’t ask a Libervant question, since you’ve been with us on Libervant for quite some time.

Gary Nachman: I am not done yet. I have a question on that.

Stephen Wargacki: All right, we’ll get to that then, we’ll get to that. And I appreciate you asking that question so that I’m clear with everyone. We have no intention, I’ll even repeat it. We have no intention of filing our NDA without the pediatric component. So we are not signaling in any way that we are going to do just an adult filing. This is just, in our view, the most efficient way of getting to a complete filing. So, we would expect our label at launch to be the same as the EpiPen dose label. So 30 kilos and up in terms of ability to dose.

Gary Nachman: Okay. And just again, how long would it take for you to run that study? And just when you break down the market, peds versus adults, can you quantify that a little bit, just so we have a sense?

Dan Barber: Yes. My memory of the difference between peds and adults is somewhere around that fifty-fifty mark. So about half the market is adults, half the market is kids. In terms of how long it will take to run the pediatric study, we don’t believe this is a difficult study to run at all. It is – again, it’s a single dose, so there is no crossover, there is no having the pediatric patient come back and go again. So literally, the child comes in, they take a dose of Anaphylm, we track their PK for a period of time. And Steve do you recall how long we track for?

Stephen Wargacki: Few hours.

Dan Barber: A few hours primarily. So we do not believe that is a long study in any fashion.

Gary Nachman: Okay. And then on Libervant, so congrats on getting that approval in two to five. And I am curious, on the commercial side. So what you are doing now with Libervant currently? How much are you going to be able to leverage that for Anaphylm, setting up a distribution network? I know that Anaphylm is still a ways away, but how much of a consideration is that in terms of the investments that you’re putting behind Libervant? And then I also did want to get a sense from you guys, given the whole situation with the ODE, if you are expecting a challenge from Neurelis at some point on this approval? And do you think it’s even possible to sign a potential partner before having better visibility on that? I know ideally, you would like to find a partner if you can, but do you think you will need better visibility on the legal front for that to happen?

Stephen Wargacki: Yes. No, Gary, you know as well, it’s like you’ve been sitting in our boardroom with us. The Libervant products, the really, I’ll call it tantalizing thing for us with Libervant is if we were to keep it, we do get to build out pieces of infrastructure and not only build it, but get to use it well ahead of the Anaphylm launch. So think of distribution, payer access, all of those pieces you can almost think of it as getting the cobwebs out a little bit of the system before Anaphylm launch. So that is appealing. I don’t know, ultimately that that will drive the decision, because I think, we have to stay true to our mission statement, which is we want to help patients and you need to maximize getting this product into patients hands.

But it is definitely a factor that we are aware of. In terms of ODE, yes, really interesting situation on that front, as you noted. So first on our product, we are still in the waiting phase to get the determination from the FDA on our orphan drug exclusivity for the two- to five-year-old space. As I said in the prepared comments, we anticipate receiving ODE, there is no reason we shouldn’t. When we look at analogs, they received ODE. So we think that’s just a matter of waiting and seeing. So once we have that, obviously for our product, we would have seven years of the two- to five-year-old space for just our product and the existing products. In terms of being challenged on the approval and market access of our product, while obviously we don’t control the actions of any of our competitors, all we can say is as of 8:50 Eastern Time on May 8, we are not aware of a complaint being filed against the FDA by anyone.

So it is, as you know, is no small undertaking to effectively sue the FDA. You would think that if you were going to, you would want to get that started. So I don’t have any more color for you on what others will do in this space.

Gary Nachman: Okay. And then [indiscernible].

Stephen Wargacki: Yes, I am sorry, you did have one last part to that question. Yes, we absolutely do think it is – we can partner – we can license out the Libervant product at our discretion. I don’t think that from our interactions with the various companies that are interested, this does not appear to be a roadblock at this time.

Gary Nachman: Okay, great. Thank you.

Operator: Thank you. [Operator Instructions] Our next question comes from Thomas Flaten with Lake Street Capital Markets. Your line is open.

Thomas Flaten: Great. Thanks for taking the questions. Just on that last point, Dan, I know you guys had backed off a little bit your engagement with FDA around the six plus Libervant approval, because you wanted to get the two- to five-year old out. Now that that’s been approved, how are you thinking about reengaging with FDA, kind of on a major contribution to patient care basis to see if you can overturn the ODE that is in place in that space?

Dan Barber: Yes. Good morning, Thomas. And by the way, we noted you were the first one on the line this morning, so definitely impressed, considering you are in a different time zone. But in terms of your question on that front, I think, that the engagement with the FDA will happen. Sorry, I was looking across the room at my colleagues here. In terms of our engagement with the FDA we will, now that we’ve gotten this particular filing out of the way, we will pursue the adult again. As you know, while we think we have very good arguments, the wheels at the FDA move at a certain pace. So we will just continue to follow that process and see where it leads.

Thomas Flaten: And then you mentioned earlier that with a salesforce of 80 to 100, you could hit the top five deciles. Was that based on specialty or was that just EpiPen prescribing period, regardless of whether it was specialty or primary care.

Dan Barber: My understanding from the deciling that we have seen is diabetes that is across the universe. So, look, there are a couple of non-allergy, non-pediatric call points that would just be high prescribers that are baked in there to some degree, but very minor. But no, that’s a decile look.

Thomas Flaten: Got it. Appreciate it. Thanks so much.

Operator: Thank you. I am showing no further questions. I would like to turn the call back over to Dan for closing remarks.

Dan Barber: Thank you, Michelle. And thank you, everyone, for joining us today. I couldn’t be happier with where we are as a company right now. We’re in a great place. And we are focused on the execution of our business plan as we’ve shared with you. We have a variety of, what we believe, are important milestones between now and our Q2 earnings call in August. And we look forward to keeping you updated over the next several months. With that, I will close the call.

Operator: Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.