Aquestive Therapeutics, Inc. (NASDAQ:AQST) Q3 2024 Earnings Call Transcript

Aquestive Therapeutics, Inc. (NASDAQ:AQST) Q3 2024 Earnings Call Transcript November 5, 2024

Operator: Good morning, and welcome to the Aquestive Therapeutics Third Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be 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. We’re going to provide an overview of recent business developments and performance for the third quarter of 2024, followed by a Q&A session. During the Q&A session, the team will be joined by Dr. Carl Kraus, Chief Medical Officer; Dr. Steve Wargacki, Chief Science Officer; and Sherry Korczynski, Senior Vice President of Sales and Marketing. As a reminder, the company’s remarks today correspond with the earnings release that was issued after market closed 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 a review of third 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 November 4, 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 this cautionary statement 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. Good morning, everyone, and thank you for joining us today. I am pleased to say that we have once again made tremendous progress since our last earnings call in early August. This is truly an exciting time for the Aquestive team. In the last three months, we have announced a major new product candidate from our Adrenaverse pipeline program with AQST-108 for alopecia areata, expanded our Libervant launch in the two to five year-old space by adding retail distribution and a full sales team, completed what we believe to be our final adult study for our Anaphylm program and submitted our pre-NDA briefing book to the FDA and in anticipation of a fourth quarter pre-NDA meeting. We believe this work has set us up well for continued progress in 2025 and beyond.

Now let’s focus on Anaphylm. We recently announced the top line results from our oral allergy syndrome challenge study, which we refer to as our OASIS study. The OASIS study was requested by the FDA to provide clinical data showing that epinephrine plasma concentrations following dosing of Anaphylm are similar with and without the presence of an allergen. As you have seen from our reported results, we have confirmed that the absorption profile of Anaphylm remains the same whether subjects have been exposed to an allergen or not. Importantly, the most meaningful part of this study was our symptom resolution data. During the OASIS study, we tracked the time to symptom resolution without Anaphylm administration and with Anaphylm administration.

As a reminder, symptoms included swelling of the lips, tongue and throat along with nasal congestion and systemic symptoms, such as GI tract discomfort as well as tingling. When no Anaphylm was administered, the median time to full symptom resolution was 74 minutes. When Anaphylm was administered, this dropped to 12 minutes. In fact, there are three numbers that resonate with me from this study, 2, 5 and 12. The data showed that subjects started seeing symptom resolution two minutes after the administration of Anaphylm. All swelling symptoms were resolved within five minutes and median time to full symptom resolution was 12 minutes. These are truly remarkable results that make us wonder if treating at the site of symptoms may bring additional benefit to patients.

This is something we hope to understand more as we continue to progress. One of the questions that we have heard from the allergy community is how to correlate this data to anaphylaxis. I have discussed this with our medical experts, and we believe that it is important to note the systemic symptoms from our OASIS study, as well as the fact that up to 10% of OAS reactions progress into more severe allergic reactions with up to 2% resulting in anaphylaxis. This gives us confidence that the OASIS study increases our understanding of how Anaphylm works in the presence of edema. I am also excited to announce today that we received the first part of feedback from our FDA pre-NDA process. We had previously submitted our chemistry, manufacturing and controls pre-NDA questions to the FDA.

We recently received a written response from the FDA on all our questions, and I am pleased to say we found the FDA’s responses supportive of filing our application. I am also pleased to confirm that we have submitted our Anaphylm film clinical briefing book to the FDA for review ahead of our pre-NDA meeting. While we are not disclosing the specific date of the meeting, we remain on track to complete this meeting before the end of the year. We plan on sharing our findings from this meeting once we have final FDA meeting minutes, if not sooner. If the FDA is supportive of our plans for submitting our NDA, then we will immediately start our pediatric pharmacokinetic or PK study. This is a single-dose study in children and adolescents between the ages of approximately 7 to 17 years of age.

We expect to enroll between 18 and 24 subjects. This will be a multi-site study and each subject will be administered one dose of Anaphylm. Blood draws will be taken and then the subject will go home. This is a similar study to the one conducted by the recently approved epinephrine nasal spray. Based on the anticipated positive FDA feedback and the expected pace of enrollment in our pediatric study, we continue to plan for a Q1 2025 filing and a Q1 2026 launch of Anaphylm, if approved by the FDA. Now turning to our commercial capabilities, they continue to grow on a daily basis. Our Libervant launch in the two to five-year-old space has helped us build infrastructure around pharmacovigilance, medical affairs, market access and sales management.

This has been particularly helpful when it comes to market access as we know that a successful launch must include quick wins with payers. That is why I am pleased to share with you today that we now have Medicaid coverage of Libervant in all 50 states, and we recently completed agreements with two of the top three PBMs and are in negotiations with the third. I am also pleased to share that as of the first week of October, Libervant was available through retail distribution on a national basis and we have a dozen sales colleagues spending their days educating physicians on the benefits of Libervant for the indicated patient population. This has resulted in a steady increase in prescriptions between September and October, and we are working hard to continue this trend.

We will take these learnings and apply them to our Anaphylm commercial launch, if approved by the FDA. We have continued to increase our non-promotional efforts in the anaphylaxis space. These efforts will be an area of increased focus as we move towards submission of our NDA for Anaphylm. Now, let’s turn to AQST-108, our epinephrine prodrug topical gel. As you heard during our Investor Day on September 27, we believe that the commercial opportunity for AQST-108 could be equal to or larger than Anaphylm. Our goal for 2025 is to conduct a Phase 2a study that will provide additional clinical data supporting our view on the benefits of AQST-108 for alopecia areata. This week, we submitted our briefing book to the FDA for our pre-IND meeting, and we continue to anticipate concluding this activity before the end of the year.

We will then open our IND and begin the Phase 2a study. As a reminder, our initial study will focus on determining if we detect a meaningful change from baseline in the Severity of Alopecia Tool score or SALT score for enrolled subjects. We believe patient unmet needs in alopecia areata remain high, the existing JAK inhibitor treatment products in this space worked systemically and come with a significant black box warning. We anticipate AQST-108 will only be absorbed locally and may provide an opportunity for treatment without the adverse events associated with JAK inhibitors. In conclusion, we continue to focus on growing the company across multiple platforms. This includes continuing to advance Anaphylm towards NDA submission, continuing to grow our Libervant prescriptions in the two to five-year-old space and continuing to advance our AQST-108 program for the treatment of alopecia areata.

This truly remains an exciting time for the company, the patients it serves and seeks to serve and all our stakeholders. With that, I will turn the call over to Ernie.

Ernie Toth: Thank you, Dan, and good morning, everyone. By now, you 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 third quarter 2024 results in the Q&A. During the third quarter, we continued to execute on our strategy to support the further development of Anaphylm, our lead product candidate that has no needle, is not a device, is orally administered and is easy to carry. We continued our pre-commercial launch activities for Anaphylm to increase awareness among physicians, payers and the advocacy community. On April 26 of this year, we received approval for Libervant for patients ages between two and five years.

We have expanded our launch for this pediatric age group with broadening national retail distribution, expanded insurance coverage and additional commercial infrastructure, including a national sales team of 12 individuals in the third quarter to support the continued growth of this product. Now let’s turn to the third quarter results. Total revenues increased to $13.5 million in the third quarter of 2024 from $13 million in the third quarter of 2023. This 4% increase in revenue was primarily driven by an increase in license and royalty revenue due to the recognition of deferred revenue from the termination of a licensing and supply agreement, partially offset by decreases in manufacture and supply revenue. Excluding this one-time recognition of deferred revenue, total revenues decreased by $0.7 million or 5% year-over-year.

Manufacture and supply revenue decreased to $10.7 million in the third quarter of 2024 from $11.4 million in the third quarter of 2023, primarily due to the timing of Suboxone and Sympazan revenues, partially offset by an increase in Ondif revenue. Co-development and research fees in the third quarter 2024 remained relatively unchanged compared to the same period in the prior year. Total revenues increased to $45.7 million for the nine months ended September 30, 2024 from $37.4 million for the nine months ended September 30, 2023. This 22% increase in revenue was primarily driven by the increases in license and royalty revenue due to the recognition of deferred revenues from the termination of license and supply agreements, increases in co-development and research fees partially offset by decreases in manufacture and supply revenue.

Excluding this one-time recognition of deferred revenue, total revenues decreased by $3.2 million or 9% year-over-year. Research and development expenses increased to $5.3 million in the third quarter 2024 from $3.2 million in the third quarter of 2023. The increase in research and development expenses was primarily due to the clinical trial cost and product research expenses associated with the continued advancement of our Anaphylm development program and an increase in share-based compensation. Research and development expenses increased to $15.4 million for the nine months ended September 30, 2024, from $10.2 million for the nine months ended September 30, 2023. The increase in research and development expenses was primarily due to the clinical trial costs associated with the continued advancement of the Anaphylm and AQST-108 programs as well as an increase in personnel costs and share-based compensation.

Selling, general and administrative expenses increased to $12.1 million for the third quarter of 2024 from $7.4 million in the third quarter of 2023. This increase was partially driven by a $1.5 million year-over-year change in the allocation of expenses of manufactured and supply cost. Given this year-over-year change, the company expects to continue to see a positive benefit in gross margin, offset by somewhat higher selling, general and administrative expenses. Excluding this item, increases in SG&A expenses were primarily driven by increased commercial spending and regulatory fees related to the approval of Libervant and the commercial preparations for Anaphylm. Selling, general and administrative expenses increased to $34.2 million for the nine months ended September 30, 2024, from $22.2 million for the nine months ended September 30, 2023.

The increase included severance cost of $1.1 million incurred in the first three months of the year, and $4.1 million due to the year-over-year change in the allocation of manufacturer and supply cost. The remainder of the increase is largely driven by higher commercial spending and regulatory fees related to the approval of Libervant, the commercial preparations for Anaphylm partially offset by lower legal fees and decreases in other general and administrative costs, including insurance fees. Aquestive’s net loss for the third quarter 2024 was $11.5 million or $0.13 for both basic and diluted loss per share compared to the net loss for the third quarter of 2023 of $2 million or $0.03 for both basic and diluted loss per share. The increase in net loss was primarily driven by increases in selling, general and administrative expenses, research and development expenses, noncash interest expense related to the amortization of the debt and royalty obligation discounts and decreases in interest income and other income, partially offset by increases in revenues and decreases in manufacturing and supply expenses.

Aquestive’s net loss for the nine months ended September 30, 2024, was $27.1 million or $0.32 for both basic and diluted loss per share compared to the net income for the nine months ended September 30, 2023 of $0.2 million or $0.00 for both basic and diluted loss per share. The increase in net loss was primarily driven by the items previously mentioned. Non-GAAP adjusted EBITDA loss was $6.6 million in the third quarter of 2024 compared to a non-GAAP adjusted EBITDA loss of $1.3 million in the third quarter of 2023. Non-GAAP adjusted EBITDA loss, excluding adjusted R&D expenses, was $1.6 million in the third quarter 2024 compared to a non-GAAP adjusted EBITDA income, excluding R&D expenses, of $1.7 million in the third quarter of 2023. Non-GAAP adjusted EBITDA loss was $11.9 million for the nine months ended September 30, 2024, compared to a non-GAAP adjusted EBITDA loss of $8.5 million for the nine months ended September 30, 2023.

Non-GAAP adjusted EBITDA income, excluding adjusted R&D expenses, was $2.6 million for the nine months ended September 30, 2024, compared to a non-GAAP adjusted EBITDA income, excluding R&D expenses, of $1.3 million for the nine months ended September 30, 2023. Cash and cash equivalents were $77.9 million as of September 30, 2024. During the third quarter, we did not sell any shares under our ATM facility. We continue our focus in 2024 on the advancement of Anaphylm, epinephrine and AQST-108 programs and continued commercialization of Libervant for patient ages between two and five years old. As outlined in the press release issued last night after market close, our outlook for 2024 remains unchanged at total revenues of approximately $57 million to $60 million and non-GAAP adjusted EBITDA loss of approximately $20 million to $23 million.

Our guidance for 2024 includes, for Anaphylm, conclusion of the supportive studies, engaging the FDA in a pre-NDA meeting this quarter, commencing a pediatric study and pre-commercial activities for a planned launch in the first quarter of 2026, if approved by the FDA. Our guidance also includes continued expansion of the commercial launch of Libervant for patients ages between two and five and the advancement of our AQST-108, epinephrine topical gel program. With that, I will now turn the line back to the operator to open the line for questions.

Q&A Session

Operator: [Operator Instructions] Our first question comes from Roanna Ruiz with Leerink Partners. You may proceed.

Roanna Ruiz: Hi, good morning, everyone. Two questions from me. First one for Anaphylm and the clinical briefing book. I was curious what topics you seek to highlight most to the FDA? And if you’re able to share what were some of your main goals when assembling the data for this briefing book?

Dan Barber: Good morning, Roanna, do you have a second question? Or was that…

Roanna Ruiz: Second question was on Libervant. So I was also curious how did the initial negotiations go with the first two PBMs? And if you have any color around that?

Dan Barber: Sure. So let me — I’ll talk to the Anaphylm question, and then I’ll hand it over to Sherry, who will give you her view of how the negotiations have gone. Though I may not be able to help myself and might give you a comment or two. In terms of the clinical briefing book for Anaphylm, look, as you know, we are exactly where we wanted to be. We — when we look at the goal of that meeting, it’s very simple. We have done everything the FDA has asked us to do to date. We think the results of what we have produced are positive, as we’ve shared with the public. And we’re looking for the FDA to provide us their guidance on the completeness of our package. So we think we’re well positioned. We think we put our best foot forward, and we’re excited for that upcoming meeting.

In terms of Libervant in the negotiations, I also couldn’t be happier with the work that Sherry and her team have done in terms of getting us positioned well. And I’ll let her walk you through what she’s seeing so far.

Sherry Korczynski: Thanks, Dan. Hi, Roanna, how are you? Thanks so much for the question. Our negotiations thus far with our account team have been very, very positive. What we’re finding, in both at the state Medicaid level as well as with the commercial PBM, is that as long as the product is being prescribed, for patients ages two to five, we are getting — Libervant is getting covered for these patients. And so we continue to broaden our reach into the downstream payers as well. And again, it is very consistent. There is a significant unmet need in the market. And for patients ages two to five, it is really being seen by physicians and payers as a game changer.

Roanna Ruiz: Got it. That’s great. And one quick follow-up for Libervant. I noticed you mentioned you have Medicaid coverage now. When should we expect that to start to impact prescribing going forward?

Dan Barber: Well, I would remember to think about the two to five-year-old spaces we’ve guided before. From a financial perspective or a size perspective, that will be limited in scope and what that does for Aquestive in 2025, where I would have people look in terms of results and what we’re driving for the company, is our ability to get coverage, drive patients to our product, which we believe is a better product than the product that’s in the two to five-year-old space right now, and get our scripts to grow accordingly. So I believe we’re on track to do that with now our national sales force in place for — Sherry, what — all of three weeks at this point, three or four weeks?

Sherry Korczynski: Four weeks, yes.

Dan Barber: And we’re really excited by the feedback we’re getting so far. So while it will be financially small until we are able to access the entire market in the years to come, we think the learnings we’re getting are the places to focus on as we go forward.

Roanna Ruiz: That’s great. Thanks.

Operator: Thank you. Our next question comes from David Amsellem with Piper Sandler. You may proceed.

David Amsellem: Thanks. So I just have a couple. First, regarding the NDA for Anaphylm, are you going to assume or at least prepare for an Ad Comm, particularly given the experience with neffy, how are you thinking about that or how should we think about that? That’s number one. Number two, can you just remind us how you’re thinking about the initial sales force for Anaphylm? I’m specifically interested in, how are you thinking about prescriber concentration along EpiPen and what that means in terms of your target audience and initial sales force headcount? And then lastly, Libervant question, which is as you have executed on regarding payers and obviously launching into that two to five segment, is it more likely or just as likely that you’re going to continue to keep rights to the product and ultimately, over the long term, launch it in a wider population? In other words, is this asset core to the overall mission of Aquestive? Thank you.

Dan Barber: Sure. Good morning, David. So I think I captured the three questions. And let me — just for fun this morning. Let me go in reverse order. So I’ll answer your question on Libervant. I’ll then hand it to Sherry, who could talk about the concentration of prescribers for Anaphylm. And then Carl, you can close it out for us on your view on Ad Comm. But so your question on Libervant, I think, is a great one because it goes back to what are we trying to accomplish as a company. And if you look at what we’ve done over the last couple of years, this is a steady march to building a continuously more valuable company. So we’ve got three different products that we think are all very valuable, Anaphylm, 108 and Libervant, and we’ll continue to pursue maximizing the value of those products for all our stakeholders, obviously, the patient but also the shareholders.

So with Libervant in particular, right now, we think we’re incredibly well placed. We’re able to launch our product into a very specific area, get all of the infrastructure pieces and parts up and running, get learnings for Anaphylm, and that’s all very beneficial to us. So right now, our focus with Libervant is on growing it in the two to five-year-old space. When the opportunity comes to be in the six and up space, we absolutely want to be front and center and ready to launch. In terms of all of our products, whether we hold on to all of the efforts ourselves or augment our efforts with other people’s sales forces, that is purely whether it falls into our ability to grow the company or not. So we will always look to what’s the best for the company and what’s the best for the shareholders on all of our assets.

But with that, let me pass it over to Sherry on the Anaphylm questions specifically.

Sherry Korczynski: Hi, David, thank you so much for the question. It’s a really exciting time here at Aquestive as it relates to our commercial readiness. We are — we have our plans in place to ensure we have a very successful launch. As it relates specifically to the sales force, this is a well-worn path as the allergist continues to be the most productive specialty — they prescribe approximately 200 epinephrine prescriptions annually. So our focus for our sales force will be on those allergists and then the high decile prescribing PCPs, otolaryngologists, NPPA and pediatricians. And we believe, based on the expertise that we have here in house, as that sales force about the size of 100 reps, we will be able to cover those large prescribing physicians. Does that answer your question?

David Amsellem: Yeah, that’s helpful. Thank you.

Dan Barber: And Carl, can you give your view on the Ad Comm.

Carl Kraus: Sure. Happy to. Good morning. So obviously, I can’t predict what the FDA will do. I can say that we have risk mitigated this program tremendously. All of our primary and secondary endpoints have been met for all of our studies, whether it’s our pivotal or self-administration or temperature/pH and most recently, the Oral Anaphylm Symptom Intervention Study, the OASIS study. We’re certainly considering the possibility, and we’ll be prepared for this to become an avenue that FDA pursues. But right now, we don’t have insight into the FDA’s thinking.

David Amsellem: Okay. Appreciate all the color. Thanks everyone.

Operator: Thank you. Our next question comes from Francois Brisebois with Oppenheimer. You may proceed.

Francois Brisebois: Hey, thanks for the question. So I was just wondering, you touched on the allergen test and the study. And I was just trying to figure out the importance of efficacy here based on this study, just in terms of real-world adoption with doctors. And just maybe a little more if you could push on the potential importance here of treating at the site to see benefit. Is this something that can help in the real world just because like a lot of launches, docs will kind of wait and see sometimes how things work? And I was just wondering if the OAS study is something that should really create some buzz with the medical community? Thank you.

Dan Barber: Yeah. Good morning, Frank. And I’ll pass it over to Carl in a second to walk through your full question. But I have to tell you, from my perspective, we’re incredibly excited to have this data. We think this is a differentiator. As far as we’re aware, we’re the only ones with data like this, and we absolutely from the recent interactions at several conferences with physicians think they’re paying attention. But with that, I’ll let Carl answer your specific questions.

Carl Kraus: Yeah. No, that’s a good question. And I can tell you, both anecdotally and meeting with a number of KOLs, there was widespread support that these data do indicate delivery of epinephrine into the oral cavity probably does hold promise when you think about interrupting the anaphylactic cycle or certainly localized reactions in the oral cavity. I hadn’t realized this, but many allergists actually use the direct spraying of epinephrine into the back of the oral cavity when these symptoms do arise as a way of trying to get more drug at the site of reaction. Also worth noting that we do have, for the first time, an oral physiologic change model that hadn’t been developed before, and those changes did not impact Anaphylm absorption, as Dan said earlier, we certainly shrink time to symptom resolution.

All of those in my mind certainly underscore the fact that we now have a potentially predictive model that one could use and think about when it comes to evaluating anaphylaxis. So useful for many different regards.

Francois Brisebois: Thank you. And then just — go ahead.

Dan Barber: I was just going to say, we just released these results I don’t know, less than 10 — or maybe about 10 days ago, and we didn’t have the opportunity to hold a conference at that time with this community. So we really appreciate you bringing this up because this is a big major point for our program. But anyway, you were going to ask an additional question I think?

Francois Brisebois: Great. No, I think it makes a lot of sense. I just wanted to — this is not as much a question as I just — I don’t think I heard it quite right. The percentage you mentioned, I think, 10% progressed with the allergen test. I just — you mentioned a percentage in terms of patients that progressed to anaphylaxis in the real world. Can you just repeat what that was in your prepared remarks?

Dan Barber: Sure. My prepared remarks and Carl can add to it if you would like to take deeper, was that in oral allergy syndrome, so OAS, which was the model we used for the study, there are a percentage of patients when they have an OAS reaction do progress into anaphylaxis. So the literature says that around 10% — it’s 9% to 10%, have a more severe allergic reaction that progresses from their initial reaction and 2% actually end up with anaphylaxis. So we’re simply making the point that OAS is somewhere on the continuum of anaphylaxis.

Francois Brisebois: Okay. It’s 2% of the total? Not 2% of that 10% sort of?

Dan Barber: It’s 2% of the total. That’s correct.

Francois Brisebois: Okay. Perfect. Thank you.

Operator: Thank you. Our next question comes from Raghuram Selvaraju with HC Wainwright & Co. You may proceed.

Raghuram Selvaraju: Thanks so much for taking my question and congrats on all the progress. Can you hear me?

Dan Barber: We can hear you just fine, Ram.

Raghuram Selvaraju: Okay. Very quickly. With respect to Libervant, I was wondering if you could comment on two things. One is the overall pricing paradigm that currently prevails with respect to VALTOCO and what you believe is likely to be the implication for the future introduction of Libervant into the adult population? Any kind of thoughts there? Any granularity you can provide to us regarding where the pricing levels are? And secondly, you mentioned in the press release that you will be filing for approval of Libervant in that population ahead of the expiration of orphan drug exclusivity on VALTOCO. But I wanted to better understand what that means? How far in advance of the expiration of exclusivity in early 2027, do you expect to file? And what are the likely implications of that with respect to the FDA path forward? Thanks.

Dan Barber: Yeah. And thanks, Ram. Let me start with the Libervant filing question because that’s largely just a technical question. So the way it works is we have to submit our administrative filing, I’ll call it, six months before we’re requesting the date of approval, right? So we would just time that based on when the ODE exclusivity expires. And we also still have to complete the approval process for the 6 to 11 because we were obviously focused in other places. So that — most of that will be behind the scenes because it’s just technical FDA paperwork, I’ll call it. But rest assured, our plan and the work we’ll be doing will set us up and our goal continues to be that the day we’re allowed to sell in the six and up population.

So sixand up in all adult that we will not only be ready, but we will be approved and in the market. On the pricing side, I would give you this to think about what we’re finding so far with launch is this is a rescue product. This is a rescue product in epilepsy and right now in pediatrics. So we have not found price to be an obstacle. We have not found coverage to be an obstacle. We have not found in places where there’s still a prior auth because we’re going through the contracting process. We have not found prior auths to be a problem. So we feel that the payer community understands the necessity of the product and is acting accordingly. In terms of how pricing dynamics will come when we have access to the full market, we have no reason to believe right now that they would be materially different than they are today.

Raghuram Selvaraju: Okay. That’s very helpful. Somewhat analogous question with respect to Anaphylm. Since neffy is on the market, I was wondering if you intend to do any kind of prescriber outreach or market research to kind of assess who the high-value prescribers or high frequency prescribers of neffy are? Who might not necessarily be completely on board with prescribing neffy? And in those kind of two general populations of prescribers, what sort of product characteristics that are embodied by Anaphylm product profile as seen so far would be most likely to appeal to them — sort of as a precursor to engaging in sort of full-blown launch preparations for the product?

Dan Barber: Yeah. Well, in a second, I’ll hand it over to Sherry, who could just walk you through the survey type work in general that we’re undertaking and preparing. But what I would say, as a general comment, is one of the nice things about watching a competitor launch in this space, is exactly that. We’re getting to watch. So we absolutely are watching the pricing dynamics, watching the prescriber habits and reaction, watching the spots where things work, watching the spots where things don’t work. So we continue to believe that this is not a zero-sum game for the space that the product — the patient need is high. And that as patients learn about alternate products, they will be looking for what fits them best, which I think leads to your question of what characteristics in our survey work that we think are most exciting for us, which I’ll let Sherry cover for you.

Sherry Korczynski: Sure. Hi, Ram, thanks so much for these questions. It’s rare to be able to launch multiple products that are game changers. But I can tell you, again, based on market research, we were engaged in over the last few weeks, it is a common term that physicians are using game changers for their patients. And why is that? Well, if you think about it, this product category has a significant unmet need. And when you — as you know, about anaphylaxis, it is a condition that can — comes on rapidly and can lead to very challenging outcomes. So it is critical for patients to have an epinephrine product so they can easily use and easily carry. And so again, all of our market research comes back to saying, Anaphylm is the easiest to carry.

It is the easiest to use. And on top of that, you have the great efficacy. It’s working quickly and consistently. So at the end of the day, who are the patients? Well, we think — look, we’re watching, obviously, very closely, and we’ll continue to watch, as Dan has shared. But you’re always going to have those physicians that are quick adopters. You’re going to have patients that are quick adopters. And so we also believe that patients with an active prescription, neffy or their devices, will be quick adopters of our products, both patients and HCPs. We believe that patients that are newly diagnosed, that don’t yet have a prescription, but neffy will — or excuse me, Anaphylm will be the preferred option. And finally, we see this market expanding in that patients that have never filled a prescription and just avoid their allergen will be a great patient too for the product.

Raghuram Selvaraju: Great. Thanks. And very quickly, one last thing with respect to 108. Given the timeline that you’ve laid out with respect to the IND and initiation of the Phase 2a trial, are we to assume that this effectively falls within the scope of the previous timeline guidance that you provided indicating an expectation that this product could be launched before the end of 2028? Just wanted to make sure that things are still effectively on track relative to what you previously showcased at the Investor Day event?

Dan Barber: Yes, Ram. We’re very excited and very serious about 108. We’ve already, as you heard from the comments before in our press release, we’ve already put our briefing book into the FDA. We are ready to file our IND and we want to get our Phase 2a going. So absolutely on schedule, just like we laid out just a few weeks ago.

Raghuram Selvaraju: Thank you very much.

Operator: Thank you. Our next question comes from Jason Butler with JMP Securities. You may proceed.

Jason Butler: Hi, thanks for taking the question. Just thinking about the meeting with FDA for Anaphylm, can you maybe talk about — and obviously, I understand you can’t go into a ton of detail here, but what aspects of the product label do you think are still up for debate or discussion? What data do you think that you can discuss with FDA, including the oral allergy challenge study, pediatric study, et cetera, but just anything that can help provide a differentiated picture relative to neffy? Thank you.

Dan Barber: Yeah. Good morning, Jason. I’ll hand it over to Carl in a second here. But yes, just in terms of global strategy with a label like any company in our position, while there will be elements of the label that are just standard, we do believe that we have differentiation in a couple of places like you mentioned, the OASIS study, that could be very interesting. But Carl, I’ll let you go a little deeper.

Carl Kraus: Yeah. No. Jason, thank you for the question. And I completely agree. I think there are elements here that are clearly differentiating. We’ve created and demonstrated utility with regards to thinking about symptom resolution in a relatively predictive model, right? We’re actually introducing allergen into the oral cavity where you typically see allergens introduced in people with food allergies. But with regard to the forthcoming pre-NDA meeting, as Dan said earlier, the overarching intent is to align on the completion of the adult program and march forward with the execution of the pediatric program study. So that is really the intent overall, but we’re certainly considering all potential opportunities to include the most recent data as a differentiating element.

Jason Butler: Great. And then just a follow-up for Ernie. I understand you’re not going to give guidance for 2025 at this point. But how should we think about the trends for legacy revenues as we exit this year? And I’m not thinking about Libervant or Anaphylm, everything — but everything that’s driven the other revenue streams up until now? What is the tail kind of life of those royalty streams or revenue streams? Thanks.

Ernie Toth: Well, I think you’re asking mostly about Suboxone. Look, we — as we’ve said in the past, it is a legacy product for us that continues to generate cash flow. It’s an important part of the company. But recognizing that its future and we — is somewhat questionable at times, depending on the competitive nature of the market, we depend on Indivior for the orders. And we would expect there’s going to be some level of dislocation in that market, and that will flow through to us going forward. But we continue to stress, it is an important part of the company. It generates positive cash flow for us. And I think when we provide our guidance for 2025, we will take that into account.

Jason Butler: Okay, great. Thanks for taking the questions.

Operator: Thank you. Our next question comes from Thomas Flaten with Lake Street Capital Markets. You may proceed.

Thomas Flaten: Excellent. Good morning and thanks for taking the questions. Sticking with Ernie, for the cash runway into 2026, what level of commercial investment does that contemplate for Anaphylm? Will you have a fully staffed sales force stood up by then within that guidance? Or will you — does that contemplate something more maybe measured from a sales force perspective?

Ernie Toth: So what we have said in the past, Thomas, is the cash gets us into ’26. We’ve not given any more granularity on that. But what we could say is — here in ’24 and ’25, that cash supports the launch of — the expanded launch of Libervant, and that will continue into ’25. It includes all pre-commercial activity in ’24 and ’25 for Anaphylm. But we’ve also publicly said that we would not be ramping up any sales rep force until we have approval.

Thomas Flaten: Got it. Appreciate that. And is there anything ongoing with respect to trying to overturn the orphan drug exclusivity for Libervant? I know a while back, the major contribution to patient care argument that was trying to be made. Is there anything going on there still?

Dan Barber: Yeah, Thomas. We do have, what I guess I would call, back and forth with the FDA. But as you can see from the way we’ve positioned the company, that is not where we are putting a lot of our energy right now. So our focus is on the next milestone, and next few milestones for Anaphylm. Our focus is on building Libervant 2 to 5, focuses on getting 108 for alopecia areata through the next couple of milestones. And yes, somewhere behind all of that, there is effort with the FDA. But the main place I would focus in terms of that exclusivity is just watching the clock run out.

Thomas Flaten: Good. Appreciate it. Thank you.

Operator: Thank you. Our next question comes from Gary Nachman with Raymond James. You may proceed.

Gary Nachman: Thanks, good morning. So back on Anaphylm, do you still need to get alignment at all specifically on the pediatric study at the FDA meeting or do you feel you have good visibility on the dosing design for that pediatric study that you’re going to start soon after the meeting? And then how will you be prepping the NDA while the PED study is ongoing so that you meet the 1Q ’25 filing? And in the CMC feedback, anything you still need to do with manufacturing before the filing? Or is that completely buttoned up?

Dan Barber: Yeah. Good morning, Gary, I’m glad you brought up the CMC because sometimes from our perspective, because we have such a deep history in CMC, we don’t talk about it as much as we should. But that was, in my view, a major win for our organization. And I’ll pass it over to Steve who can give you his view on what it means for a major part of the NDA, which, by the way, as you know, I think more than half of CRLs that occur are due to the CMC sections of NDAs.

Steve Wargacki: And thank you, Dan. Gary, yeah, we’re really excited about the feedback we got. We were able to align on all of the important features that you just want to present in the best possible way. Having completed all of the work we’ve needed to do for our filing. But the presentation of that data, the specifications, all of the stability data and things that we’re going to use within our NDA and just aligning on exactly how that’s presented is a big win to have the cleanest possible filing.

Dan Barber: And going on to the prepping of the NDA, yeah, that — Gary, as you know, an NDA is a major paperwork undertaking, I’ll call it, to get into the FDA. So there are major sections of that NDA that are — we now have all the information, right? So CMC being one of them. So yes, the work is going on as we speak to prepare the NDA and the information that we gained from whatever is left to do from here forward would be slotted into the document as we get close to filing. In terms of pediatric alignment, I’ll let — while I think you can look at our — the competitive landscape and see that the pediatric study is fairly standard across all of the different programs. I’ll let Gary — excuse me, I’ll let Carl give you his view.

Carl Kraus: Yeah. Thanks, Dan. Thanks, Gary. The study design itself is quite straightforward, as Dan alluded to. We do and I certainly do expect and anticipate alignment with the FDA for our targeted adolescent study, which would be 7 to 17 using the same dose. So I don’t anticipate anything other than moving forward after this pre-NDA meeting.

Gary Nachman: Okay. Great. And then maybe you could just comment on what the expected shelf life is going to be for Anaphylm versus neffy? And any potential temperature requirements? And then just on 108 regarding the Phase 2a in alopecia areata, how confident are you the FDA will be aligned on that study design in your pre-NDA meeting, both in terms of doses and endpoints that you’re looking at? Thanks.

Dan Barber: Yeah. Thanks, Gary. So we understand shelf life is an important component for patients and caregivers in this space. And shelf life can mean different things to different people, right? So when we refer to it on calls like this as life sciences experts on our side and your side, we’re typically referring to the temperature at which you can store the product, right? But we think when you look at what’s important to patients and caregivers, it’s the ability in the real world to have a product that can go through all of the daily changes of their lives and still work, right? So our focus is on that way of thinking around shelf life. And while we haven’t stated what our excursion data and our shelf life data will look like, we absolutely are planning on making that robust and something that meets the needs of patients. In terms of alopecia areata, I will let Carl give you his view.

Carl Kraus: Sure. Thanks for the question. And we really did rely heavily on the published data from the Olumiant the BRAVE-1, BRAVE-2 study, where they conducted regression fitting for those data really showing that there’s a strong cohort of early responders. And we’re using that as our biomarker. I suspect that FDA would view that appropriately as a reasonable endpoint given that these are data extracted and published from the recently approved drug for this indication, but just leveraging their analysis for our needs in an earlier Phase 2 study. So I do think this will be well received, but we’ll have to wait for their responses.

Gary Nachman: Okay. And then if you start that Phase 2a in, was it going to be the second quarter of next year? Just how long to get the data? I know you said before that the overall timeline — longer-term timeline is intact, but just — maybe just comment on the Phase 2a specifically?

Dan Barber: So we haven’t given guidance yet on when we think the conclusion of that study will be. But Carl maybe you could just give some high-level thoughts around how you would think about it generally.

Carl Kraus: Yeah. So we’re looking to have as an adaptive study, an interim look at 12 weeks. Presumably, we’ll be able to move forward, then we would have a 24-week readout. But if you add that all up, I would obviously think that we’re going to be somewhere a little bit north of six months.

Gary Nachman: Okay, great. Thanks, guys.

Operator: Thank you. Our next question comes from James Molloy with Alliance Global Partners. You may proceed.

James Molloy: Hey, guys. Thanks for taking my questions. Just a couple of quick ones. I know that you touched upon whether or not you going to make a decision on partner and a self-launching based on what’s best. When do you think you’ve come to that decision? Is that something that happens post hopeful approval next year? Or what are the deciding factors for self-launch versus partner? And then on the AQST-108, what is a post-Phase 2a/2b trial timelines look like? I mean, I know that 2028 is the expected launch. Will you walk us through how you get to that, please?

Dan Barber: Sure. And good morning, Jim. In terms of partner versus self-launch, my philosophy for lack of a better word, you should never look at the universe as black and white as it’s one or the other. So as we’re building this company, as you’ve seen as we hit the milestones that we’ve put out ahead of us, we’re always interacting with the community — the life sciences community around us. When there are opportunities that enhance our ability to grow, enhance our ability to get to more patients, we’ll take those opportunities. When those opportunities are not there, we’ll do it ourselves. So we don’t look at it as a black and white by the state. We either have to have a partner or by the state, we have to self-launch. It is a continuum.

And what I think we’re very good at, as a management team, is making sure that we stay focused on growing rather than on specific moments and time around partners versus self-launch. On 108, I think this gets back to the question Gary asked before. We are — as you’ll see from the materials, we are planning on starting the Phase 2a in the second quarter of next year. As I said before, we haven’t given specific guidance on when that would conclude. Carl gave a high-level view that perhaps it’s a six-month-ish timeframe. And our plan obviously would be after that, typically, there would be a Phase 2b. And then after that, we would do our Phase 3 as we get further along, we can talk about [Technical Difficulty] of the Phase 2b into Phase 3 and so on.

But all of that, we believe, can be done in a reasonable timeline for launch in 2028.

James Molloy: Okay. Just a quick follow-up on that. Because I’m looking at the timeline you guys present from last month or the other month, the Phase 2a Q3 ’25, the Phase 2b — I’m sorry, Phase 2a Q2 ’25, Phase 2b Q3 ’25, which seemed to suppose a three-month timeline. Should we think that maybe that it’s more likely that’s a little longer than that for, say, a fourth quarter [ultimately] (ph)?

Dan Barber: Yeah. I would focus on as Carl alluded to in our Investor Day and some of the discussions we had publicly since then, we are — and actually, I think he mentioned it today, we are contemplating having adaptive design to our study. So what that would allow us to do is get some of that additional information that would come from a Phase 2b as we go, which actually I believe there’s a slide in our Investor Day presentation that would lay out that continuum from Phase 2a to Phase 2b.

James Molloy: Great. Thank you very much for the questions.

Operator: Thank you. I would now like to turn the call back over to Dan Barber for any closing remarks.

Dan Barber: Thank you, Josh. Well, thank you to everyone for the time this morning. I just want to reiterate the excitement we have about the moment we’re in for this company. We believe we have built value across several different areas, and we’re focused on continuing to hit our milestones. And as we continue forward, you’ll hear us be disciplined about staying focused on those milestones. With that, we appreciate your time, and we will talk to you soon.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.