Aquestive Therapeutics Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2024

There are 15 speakers on the call.

Operator

Good morning, and welcome to the Questifer Turpinix Second 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. 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 West Investor Relations.

Operator

You may begin.

Speaker 1

Thank you, operator. Good morning and welcome to today's call. On today's call, I am 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 Q2 2024 followed by a Q and A session. During the Q and A session, the team will be joined by Doctor. Carl Cross, Chief Medical Officer Doctor.

Speaker 1

Stephen Werkacki, Chief Science Officer and Sherry Korsinski, 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 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 Q2 2024 results. A description of these measures along with the reconciliation to GAAP can be found in the earnings release issued yesterday, which is posted on the Investors section of Aquestive's website.

Speaker 1

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 August 6, 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.

Speaker 1

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.

Speaker 2

Thank you, Bennett. On the heels of our successful equity raise in the Q1, we had a very eventful second quarter. We progressed our ANIFILM epinephrine sublingual film program, gained FDA approval of Libervant diazepam buccal film for the 2 to 5 year old age group, streamlined our base business to focus on growth and continued to expand our Libervant launch efforts for epilepsy patients aged between 2 5 years. As usual with Aquestive, this was an action packed 90 days. Starting with ANIFILM, our momentum continues to build.

Speaker 2

When I look at the competitive landscape for ANIFILM, I remain more optimistic than ever. With the potential to be the 1st and only oral epinephrine product for the treatment of severe allergic reactions including anaphylaxis, we believe ANIFILM easily fits within the patient's daily life due to its highly differentiated product attributes. On past earnings calls, I have focused on some of these important attributes such as ease of carrying and ease of use. Today, let me expand on an additional area of differentiation. Let's talk about the durability of rescue products in the real world.

Speaker 2

You see approved epinephrine medical devices such as auto injectors come in liquid form and are largely made up of water. Products composed largely of water are subject to degradation in real world conditions like high temperatures. That is one of the main reasons that EpiPen has such strict storage instructions as they may no longer be effective if they are left on a soccer field in summer heat for an extended period of time. We estimate that 98% of the EpiPen formulation is water. Now think about ANAFIL.

Speaker 2

Only 2% of the ANIFILM product is composed of water. As we have seen with our other products over the last 2 decades, oral films are different. ANIFILM's low water content means it has the potential to remain stable even after long durations of heat exposure. It means ANNO Film has the potential to still work in freezing temperatures. It means Anaphone has the potential to work in a broad spectrum of real world conditions, which we do not believe can be matched by any other existing or pipeline product in this category.

Speaker 2

Now turning to our development progress, we have successfully completed 2 of the 3 supportive studies necessary for engaging the FDA in a pre NDA meeting. These are our temperature pH study and self administration study. In both cases, as we have already shared publicly, the top line data was positive. The 3rd study, our oral allergen challenge study is currently in the clinic. We are advancing our enrollment of the patients needed for the study and expect completion of the study late in Q3 or early in Q4 of this year.

Speaker 2

We continue to anticipate holding a pre NDA meeting in the Q4 and starting our pediatric study immediately afterwards. Once the pediatric study has completed, we will file our NDA. At this time, we expect to begin our NDA submission in December and complete the submission in the Q1 of 2025. Based on FDA approval, our timing for a full launch at the end of 2025 or in the Q1 of 2026 remains unchanged. Our commercial launch activities remain on track.

Speaker 2

We now have in place very experienced leadership over both our commercial and medical affairs efforts for Anafil. The team is focused on increasing awareness among physicians, payers and the advocacy community. Across this entire stakeholder universe, we are hearing that ANIFILM is the answer to address the significant unmet needs of healthcare providers, patients and their caregivers. Even though other alternative medical devices may be on the horizon, there is nothing like ANIFILM, no needle, no device, oral administration. ANIFILM is easy to carry and keep everywhere you go, whether you are headed to the beach or the soccer field.

Speaker 2

There's no need for a carrying case. Anafilm fits on the back of your phone or easily in a wallet and is durable enough to withstand the real life activities of patients, all while potentially improving the carry rate for patients. Our data suggests, ANASILM is not impacted by comorbid allergic diseases such as congestion, atopic dermatitis and asthma. ANIFILM remains highly differentiated and poised to positively disrupt rescue treatment for severe allergic reactions including anaphylaxis. As we get closer to filing and launch, we have had multiple inbound inquiries from companies interested in helping us distribute Anafil.

Speaker 2

Our goal is to maximize the distribution of ANAFILM to all patients immediately if approved by the FDA. Over the next year, we will continue to examine if our commercial efforts can be augmented by utilizing the sales and distribution platforms of other companies. Speaking of commercialization, let's turn to Libervant. We are now focused on expanding our Libervant launch in the 2 to 5 year old age group. Over the last few months, we have received significant feedback on the value and benefits Libervant offers to patients and their caregivers.

Speaker 2

This feedback includes outreach from major children's institutions across the country who are proactively seeking information on Libervant. We expect to have national retail distribution capabilities in place by October 1st, while continuously improving our commercial and Medicaid coverage through the Q4. We will expand to a national sales team of 10 representatives in late Q3. We believe expanding our sales team for Libervant for the 2 to 5 year old age group will result in minimal single digit millions in cash burn in 2025 and will generate top line revenue in 2025 to be somewhere in the neighborhood of $5,000,000 While that may seem modest in the short term, there is significant benefit to the company as we prepare for our ANAFILM launch in 2026 if approved and a full Libervant launch in 2027 on the expiration of a competitor's orphan drug exclusivity. We continue to see the long term potential for Libervant as a brand with over $100,000,000 in peak annual net sales.

Speaker 2

And we look forward to our sales expansion for the 2 to 5 year old age group in the weeks to come. Now let's turn to our ADRENAVRSE epinephrine Prodrug platform. As promised, we are preparing to share more with the investor community on the future pipeline potential of Adrenaverse. As you may recall, ANA Film was born out of our Adrenaverse platform technology. We believe there are additional major products that will come from this platform.

Speaker 2

In the next few months, we will hold an Investor Day to outline how ANNO Film has helped propel our scientific thinking, the science behind our adreniverse platform, our unique intellectual property position and the potential products that could arise from the work we have done. This is an exciting part of our business. Finally, on our base business, we have completed our strategic review of our existing collaborations and eliminated our unprofitable relationships. This includes no longer focusing on China as well as terminating our U. S.-based partnership for the distribution of Exservan RILAZAL oral film.

Speaker 2

In 2023, Aquesta's revenue from exerven was negligible. Ernie will provide more details on revenue in a moment. Eliminating these distractions will allow the executives responsible for our base business to focus on products such as Suboxone with Indivior, Amylith with Zimboin, SYMPAZEN with Assertio and ONDITH with Hipera, while also preparing for higher volumes of Libervant and the launch of Anafilm if approved. In conclusion, we continue to be a company with incredible growth potential. Our lead pipeline program, ANNOFILM for severe allergic reactions, including anaphylaxis is nearing the end of its development cycle and we believe is only months away from filing.

Speaker 2

Our commercial product Libervant affords us the opportunity to begin commercialization in a low risk, low cost environment while still retaining significant long term potential. Our adreniverse platform gives us a unique intellectual property position that can generate meaningful programs for years to come and our base business continues to be a meaningful part of our story. With that, I will turn the call over to Ernie.

Speaker 3

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 Q2 2024 results in the Q and A. During the Q2, we continued to execute on our financial strategy to strengthen our financial position to support the continued development of Anafilm, our lead product candidate that has no needle, is not a device, is orally administered and is easy to carry. On April 26, we received approval for Libervant for ages between 25.

Speaker 3

2nd quarter revenue for Libervant was minimal due to limited launch activities, but we expect to expand our launch for this pediatric age group during the remainder of the year with broadening national retail distribution and expanded insurance coverage. We continued our pre commercial launch activities for ANIFILM to increase awareness among physicians, payers and the advocacy community. In addition, during the quarter, we conducted a strategic review of our existing collaborations with a prioritization of our focus on promising products from a long term profitability perspective. We terminated our U. S.

Speaker 3

And China based collaborations for Extravant, allowing us to focus on the continued development of ANAFILM, our pipeline and commercialization of Libervant for patients aged between 25. Now let's turn to the 2nd quarter results. Total revenues increased from $13,200,000 in the Q2 2023 to $20,100,000 in the Q2 2024. This 52% increase in revenue was primarily driven by increases in license and royalty revenue due to the recognition of deferred revenues from the termination of licensing and supply agreements, partially offset by decreases in manufacturer and supply revenue. Excluding this one time recognition of deferred revenue, total revenues decreased by $3,400,000 or 26% year over year.

Speaker 3

Manufacture and supply revenue decreased from $11,600,000 in the Q2 2023 to $8,100,000 in the Q2 2024, primarily due to timing of Suboxone and OnDeaf orders. Co development and research fees increased by $600,000 for the Q2 2024 versus the prior year period. Total revenues increased from $24,400,000 for the 6 months ended June 30, 2023 to $32,200,000 for the 6 months ended June 30, 2024. This 32% 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 licensing and supply agreements, partially offset by decreases in manufacture and supply revenue. Excluding this one time recognition of deferred revenue, total revenues decreased by $2,500,000 or 10.3% year over year.

Speaker 3

Excluding the one time retroactive 2022 price increase of $1,700,000 recognized in the 6 months ended June 30, 2023, manufacturer and supply revenue decreased by 5%, primarily due to lower INDIEF revenue, which was attributable to a decrease in volume due to timing of orders, partially offset by an increase in Suboxone manufacturing revenues. Research and development expenses increased from $3,500,000 in the Q2 2023 to $4,200,000 in the Q2 2024. The increase in research and development expenses was primarily due to clinical trial costs associated with the continued advancement of our ANNO Film program, an increase in personnel costs and an increase in share based compensation. As a reminder, the 1st 3 quarters of 2024 will contain expenses for multiple clinical studies being conducted to advance the Antifilm program. Research and development expenses increased from $7,000,000 for the 6 months ended June 30, 2023 to $10,100,000 for the 6 months ended June 30, 2024.

Speaker 3

The increase in research and development expenses was primarily due to the clinical trial costs associated with the continued advancement of the Antifilm program, an increase in personnel costs and the increase in share based compensation. Selling, general and administrative expenses increased from $7,400,000 in the Q2 2023 to $11,400,000 in the Q2 2024. The increase of $4,000,000 or 54 percent primarily represents higher personnel costs of approximately $500,000 share based compensation expense of $600,000 regulatory and licensing fees of $400,000 related to the regulatory fee for Libervant, consulting costs of $700,000 higher expenses of $1,500,000 due to a change in the allocation of manufacturing supply costs compared to the prior period and other expenses, partially offset by decreases in other general and administrative costs, including insurance expense. Selling, general and administrative expenses increased from $14,800,000 for the 6 months ended June 30, 2023 to $22,000,000 for the 6 months ended June 30, 2024. Of the increase of 49 percent or $72,200,000 for the 6 months ended June 30, 2024 as compared to the same period in the prior year, more than half of this increase was driven by severance costs of $1,100,000 incurred in the 1st 3 months of this year and $2,500,000 due to a year over year change in the allocation of manufacture and supply costs.

Speaker 3

The remainder of the increase is largely driven by higher commercial and regulatory costs related to Libervant and Anafilm, partially offset by lower legal fees and decreases in other general and administrative costs, including insurance. Aquestive's net loss for the Q2 of 2024 was $2,700,000 or $0.03 for both basic and diluted loss per share compared to the net loss for the Q2 of 2023 of $5,800,000 or $0.10 for both basic and diluted loss per share. The decrease in net loss was driven by increases in revenue and decreases in manufacturing supply expenses, offset by increases in selling, general and administrative expenses, research and development expenses and non cash interest expense related to the amortization of the debt and royalty obligation discounts. Aquestive's net loss for the 6 months ended June 30, 2024 was $15,600,000 or $0.19 for both basic and diluted loss per share compared to the net income for the 6 months ended June 30, 2023 of $2,300,000 or $0.04 for both basic and diluted earnings per share. The increase in net loss was primarily driven by a decrease in net other income, increases in selling, general and administrative expenses, research and development expenses and non cash interest expense related to the amortization of the debt and royalty obligation discounts, partially offset by increases in revenues and decreases in manufacturer and supply expenses.

Speaker 3

Non GAAP adjusted EBITDA income was $1,800,000 in the Q2 of 2024 compared to non GAAP adjusted EBITDA loss of $3,300,000 in the Q2 of 2023. Non GAAP adjusted EBITDA income, excluding adjusted R and D expenses, was $5,600,000 in the Q2 2024 compared to a non GAAP adjusted EBITDA income excluding adjusted R and D expenses of $100,000 in the Q2 2023. Non GAAP adjusted EBITDA loss was $5,400,000 for the 6 months ended June 30, 2024, compared to non GAAP adjusted EBITDA loss of $7,200,000 for the 6 months ended June 30, 2023. Non GAAP adjusted EBITDA income, excluding adjusted R and D expenses, was $4,200,000 for the 6 months ended June 30, 2024, compared to a non GAAP adjusted EBITDA loss excluding adjusted R and D expenses of $400,000 for the 6 months ended June 30, 2023. Cash and cash equivalents were approximately $90,000,000 as of June 30, 2024.

Speaker 3

During the Q2, we did not sell any shares under our ATM facility. We continue to be focused in 2024 on the advancement of our ANAFILM epinephrine program and continued commercialization of Libervant for patients ages between 25 years old. As outlined in the press release issued last night after market close, we are revising our outlook for 2024 as follows: total revenues of approximately $57,000,000 to $60,000,000 from prior revenue guidance of $48,000,000 to $51,000,000 and non GAAP adjusted EBITDA loss of approximately $20,000,000 to $23,000,000 from prior guidance of $22,000,000 $26,000,000 Our guidance for 2024 includes conclusion of the supportive studies, engaging the FDA in a pre NDA meeting, commencing a pediatric study, found the NDA and pre commercial activities for Anafilm, in addition to expanding the commercial launch of Libervant for patients ages between 25. With that, I will now turn the line back to the operator to open the line for questions.

Operator

Thank you. And our first question coming from the line of Rainer Weiss with Leerink Partners. Your line is open.

Speaker 4

Great. Good morning, everyone. So, two questions for me. First one, I was curious about the upcoming launch preparations for ANIFILM. Could you talk a bit about your overall plan to target key physicians and hospital accounts?

Speaker 4

And how might you pursue possibly unbranded marketing and engaging with advocacy groups alongside that?

Speaker 5

Good morning, Ruan and nice to hear your voice. So, I am very fortunate today on this call that as we've invested in our company, I have a phenomenal leader of commercial with me named Sherry Korzynejevi, who actually has a deep background in the epinephrine space. So I'm going to hand it over to Sherry to walk you through the awareness activity we're doing right now and some of her thoughts on our ANAFFO launch.

Speaker 6

Good morning, everybody. I'm super excited to be here and I cannot be more thrilled at the opportunities we have with meeting significant unmet need in the severe allergy market. As we think about what we're doing today to prepare for our launch in late 2025, early 2026, really focused on implementing a 3 pronged strategy that targets high auto injector prescribers. And this encompasses first, obviously awareness of the data and the functional benefits of ANNO Film. Secondly, believability in ANNO Film that it works at least as well as the EpiPen based on the data we have.

Speaker 6

And third, we want to ensure there is confidence to prescribe ANNO Film when approved. So to achieve this and to answer your question a little bit more detailed, we've put significant effort into 3 key areas, as you would expect at this time in preparation for launch. The first is around medical education and KOL interaction. So we're out of the allergy conferences. We are consistently meeting with the top 4 advocacy groups.

Speaker 6

We have engaged to start CME and non CME programs, leverage through channels as doctors access for information. Secondly, we're doing all of our block and tackling marketing activities to prepare ANA Film for launch day. This is market research with the high prescribers, our brand building work such as positioning, advertising concepts, key messaging and perhaps most importantly, we're having conversations have started with key payer decision makers so that at or shortly after PDUFA, we ensure that patients have affordable access to Yamasil.

Speaker 4

Got it. Super helpful. And then second one for me. Could you remind us from the recent temperature and pH and self administration studies, how the PD data tracked with the PK data and when you looked at the data in these studies and do you plan to disclose the exact specifics coming up in the fall?

Speaker 5

Sure. So, Roana, I'm going to hand it over to Doctor. Krausz in a second here. Just a technical note, I'll call it. In our supplementary materials online, we actually did include the PD data for our temperature pH study.

Speaker 5

But I'll let Doctor. Krausz give you his view on the results.

Speaker 7

Yes, I'm happy to and thanks for the question. The pharmacodynamic data as we've seen in the past does reflect the pharmacokinetic data in our data set historically and we see the same kind of tracking both in the temperature pH study as well as in the self administration study. So I think overall there is consistency across our data set.

Speaker 4

Got it. Thanks for clarifying.

Operator

Thank you. And our next question coming from the line of David Amsellem with Piper Sandler. Your line is open.

Speaker 8

Hey, thanks. Just a couple for me. So first, can you talk more specifically about the design of the pediatric study? And I believe so that's something you're going to be discussing with the FDA in your pre NDA meeting, if I'm not mistaken. So can you elaborate on the discussion points and what if anything needs to be, I guess, ironed out with the agency as it relates to the pediatric study.

Speaker 8

So that's number 1. Number 2, on Libervant, can you talk more about your long term strategy for the asset? Is the idea here to ultimately out license it or are you contemplating keeping it? I just want to get your latest and greatest on how you're thinking about the role of that asset in the business? Thanks.

Speaker 5

Sure. Good morning, David. So on the pediatric study, I know Doctor. Krausz and his team have spent a lot of time on this. So I'll let you give his view on your question.

Speaker 7

Yes. No, thanks for the question. On the pediatric study, fortunately the trial design is relatively straightforward. The intention of the study would be to determine whether the pharmacokinetic profile is able to mirror what

Speaker 5

we're seeing in adults. So I don't expect that to be a complicated design and one which we of course will need to secure alignment with the agency. And David, just to add to Doctor. Krausz's view, just 2 reminders. 1, again, in our supplementary materials, we have the design for people to see.

Speaker 5

And 2, we have shared that with the FDA before. So this is an ongoing discussion that Carl and his team are having. On your second question on Libervant, I'm really glad you asked that question because with all of the focus we have on ANNO Film, both in our company and outside of our company, sometimes Libervant gets overshadowed. But Libervant is a, in my view, a fantastic product for patients. The differentiation we offer in this space and the fact that it's the only oral product available to the 2 to 5 year old patient group is in my mind truly disruptive in that space.

Speaker 5

And we think as we get to 2027 and are able to launch across all the age groups that that will continue to unfold. So our mandate as a company is to make sure, 1, patients have the product and 2, that we maximize our upside and our position in the product. As of today, that means we are putting together and launching a small or excuse me, expanding a small sales team. Like any of our products over time, it could remain with us for 10 years or it could end up being distributed by another company in the years to come. I think that remains to be seen.

Speaker 8

Okay, that's helpful. If I may just sneak in a follow-up question on Liber Libervant. So as you get to 27 and with the ODE situation in the rearview mirror. I guess the question is, if you were to keep it, what kind of commercial infrastructure would you put behind it more broadly than what you're doing now? How many reps, etcetera, etcetera?

Speaker 5

Yes. Well, and Libervant is a much narrower call point compared to Anafilm, right? So you're talking about epileptologists who are by far the majority prescribers in that space. And our plans that we originally had when we thought we were launching Libervant years ago remain evergreen. So the rep size would be limited and we do not see that as a major lift as we get to 2027.

Speaker 5

I'm just looking at Sherry. Sherry, is there anything you would want to add to that?

Speaker 6

Well, this is really exciting. As Dan mentioned, I mean, this is a game changer for patients and caregivers. We are really excited as we have been over the last couple of months. The outreach directly to us has been significant from patients, children's hospitals, various institutions with a strong desire to have Libervant in their armamentarium, if you will. So we are, as Dan mentioned, expanding our launch to have in a very targeted way as we continue to ensure that the patients ages 2 to 5 have access to Libervant.

Speaker 8

Okay. Helpful. Thank you.

Operator

Thank you. And our next question coming from the line of Francois Brisebois from Oppenheimer. Your line is open.

Speaker 8

Hi, thanks

Speaker 9

for taking the questions. Congrats on the progress. I was just wondering in terms of the oral allergy tests and that data coming out, you talked about completion, but is completion is that a guidance on timing of the data? And just on that, can you remind us kind of the design of that trial and what to be expected?

Speaker 5

Yes. I'll let Doctor. Kraus walk you through that.

Speaker 7

Yes. No, thanks for the question. The design of the study is meant to characterize whether or not changes in the physiology of the oral cavity have an influence on the pharmacokinetics of ANIFILM. So the way that

Speaker 5

the

Speaker 7

study is designed is we take individuals who have a history of oral allergy syndrome. We challenge them to make sure that they actually have those kinds of symptoms and signs that they historically state that they have. Once confirmed, then they will be challenged with the fruit that causes the symptoms. They will be provided and dosed with ANA Film. The pharmacokinetics will be evaluated and that will be compared to the same situation, but without the challenge as well as with the intramodiscule administration of adrenaline.

Speaker 5

And on timing, Frank, yes, our guidance on timing is that we expect top line data from that study either at the end of this quarter or early in Q4.

Speaker 9

Okay, great. And then maybe on ANAFILM, we talked about Libervant and the sales force. And you talked about a lot of pre commercial efforts on ANIFILM. But can you help us segment, maybe you talked about the higher prescribers, but is it is this kind of a KOL mindset where it's very concentrated or is this really a broad population? Like what percentage is the high prescribers?

Speaker 9

And just I'm just trying to get a feel for how doable this is for a company your size and what goes into the discussion or strategy of looking to a bigger partner And just turning to decile a little bit these prescribers and what kind of sales force it would require? Thank you.

Speaker 5

Sure. I'll let Sherry take that.

Speaker 6

Thanks for the question. I greatly appreciate it. Based on the significant experience I have in this market, this is a well worn path, right? We know how many reps that would take to reach those high decile prescription prescribers. And we'll start our HCP targeting and sizing rightsizing sales force work in early 2025.

Speaker 6

I think that when you think about this market, it is spread over multiple specialties. However, the high prescribers are concentrated in allergists and pediatricians. And so we feel very good about the opportunity we have to really penetrate those high prescribing allergists and pediatricians and that will be our key focus upon launch.

Speaker 5

Thank you.

Operator

Thank you. Our next question coming from the line of Batam Selvaraju from H. C. Wainwright. Your line is open.

Speaker 10

Hi. Thanks very much for taking my questions. Firstly, with respect to ANIFILM, I was wondering if you could provide us with some more detail on what you plan to discuss at the upcoming showcase event. And in particular, if you're going to discuss ways in which you're going to differentiate ANIFILM from nephi, assuming those products are both on the market simultaneously, particularly with respect to the overall marketing message that you expect to utilize? And also if you could comment at all, assuming you're comfortable doing so, to what extent do you believe you might be able to utilize a more efficient smaller commercial footprint to support the commercialization of ANAFILM versus what conceivably would be necessary for nephi?

Speaker 10

Thanks.

Speaker 5

Thanks, Ram. So, I will we as team here, we'll try to make sure we address all of your all parts of your question, but if I missed one, please let me know. First on our upcoming Investor Day, as and this may be underappreciated based on how much we've talked about it. But when we talk about our ADRENAverse, epinephrine prodrug platform, ANIFILM actually came out of that work, right? So, we will discuss ANIFILM at the investor event, but I'm going to pass it over to Doctor.

Speaker 5

Werkacki for a second here, and he can tell you a little bit more about what we're really excited to talk about at that investor event outside of Anasalone. Thanks, Dan. Yes. So, with the Adrianaverse platform, we've learned a lot of stuff in in the genesis of ANNOFOAM. And what we've done is we've progressed that through now to expand that technology.

Speaker 5

And we're really excited to come talk to everybody here shortly about the progression we've done on the non clinical front in securing our intellectual property, as we prepare for our interaction with the agency at the end of the year. Yes. So the plug I'll put in is, make sure you attend. Think it will be worth everyone's time. In terms of the differentiation of Anafilm versus NAFI, I'm going to pass it over to Sherry in a second here.

Speaker 5

But on that in particular just at a macro level, we think we believe we are very differentiated from nephi. So, we don't see ourselves in any way as being a product that will have an issue separating ourselves. And I'll let Sherry walk you through some of the highlights from her perspective.

Speaker 6

Again, thank you for that question. We spent a great deal of time conducting market research to understand what our key competitive advantages are in the minds of physicians and patients. And as I mentioned earlier, the unmet needs in this market are well known, well articulated. Anafilm offers such a unique competitive advantage in terms of addressing those needs. The beauty of Anafilm is the simplicity of Anafilm.

Speaker 6

We know that based on our data, it works as quickly and as safely as the gold standard epi pen. Next, you don't have a needle and there is no device. 3rd is orally delivered. That is unmatched and it has been a desire for at least the last 2 decades based on my experience is that to have an orally delivered product is a game changer in the treating the patient with severe allergies and anaphylaxis. We know from our research and Dan mentioned earlier in his comments about our ability to better withstand heat withstand excursions, excuse me, full heat, washing machines, etcetera.

Speaker 6

But perhaps most importantly, and if you take nothing else away from this, it is the 1 and only epinephrine product that can fit into any lifestyle. And it doesn't require an active carry decision. So, it fits and can always be kept in a wallet, a small change purse, in the credit card holder that you put on the back of your phone. So, I believe based on my experiences in this therapeutic area, we will have the best form of epinephrine upon approval by FDA for patients and caregivers alike.

Speaker 5

Thanks, Sherry. And Ron, let me I think the last part of your question was around really around sales coverage and distribution, right? How are we thinking about that? And I think you mentioned a more efficient smaller footprint. As I put in my prepared comments, I think you hit the nail on the head, so to speak.

Speaker 5

When I look at where we are right now with $90,000,000 in the bank as of June 30 and the progression of our programs versus where we were 2 years ago, I am ecstatic with what we have done. Now the task is making sure that we are able to bring the product to all patients and that we are able to do that efficiently. We clearly, at this time, don't plan on being a PCP call point based sales force. So the efforts that we are focused on as Sherry walked you through are very targeted and they're very specific to the high prescribers. As I mentioned in my prepared comments, we do have some inbound interest that we're walking through.

Speaker 5

And as we get closer to our launch, we will look at how do we cover the entire market to make sure we maximize patients' ability to get the product.

Speaker 10

Great. And then just 2 very quick additional ones. I was wondering if Ernie could comment on the components driving the updates to 2024 top line guidance. And in particular wanted clarity on 2 aspects of this. 1 is the extent to which the revenue reported in the Q2 was effectively non cash impacting because of what you disclosed in the press release were effectively agreement terminations and recognition of deferred revenue.

Speaker 10

And also, when we look at the updated guidance number, how much of that is being driven by improved expectations for organic growth of underlying revenue streams like, for example, the royalties that you expect to receive from partners on partnered products?

Speaker 3

Hi, Ram. Thank you. Good to talk to you. So the guidance for 2024, the revenue is increased because of the deferred revenue recognition due to the terminations of the 2 agreements. As we mentioned back in May, we went through a strategic review to focus on so we're able to focus our time not only on profitable products, but also from a long term perspective, but also from a time allocation resources of being able to focus both on ANNO Film and on the expanded launch now of Libervant.

Speaker 3

So, the revenue guidance for the year does include those terminations. They as you mentioned, they are non cash items. We actually received that cash back in the 2021, 2022 timeframe. So that's cash that we had and now it's just a non cash recognition of that revenue. When we look at our again, the guidance for the year, we've taken those into account.

Speaker 3

When we look at our demand for Suboxone for the remainder of the year, we see that increasing from the levels that we've seen in the first half of the year. And then from an EBITDA perspective, we have built in now, which was not in our prior guidance, was the Libervant launch cost that we had and some additional spending, the timing of spending on the pre commercial spend for Anafil. So, all total is the revised guidance includes the recognition of deferred revenue, timing of SUBOXONE for the remainder of the year on an EBITDA basis, timing of the Libervant launched cost and also some commercial spend, pre commercial spend for Anadarko.

Speaker 5

So Ram, the only thing I'd add to what Ernie said is, if you back away from the ins and outs that Ernie walked you through, we're right where we wanted to be, right. The investment dollars we have are going to commercial and to the Antifilm development and we are on track with all of the expectations that we have set over the last few quarters.

Speaker 10

Great. Thank you very much.

Operator

Thank you. And our next question coming from the line of Thomas Mann with Lake Street Securities. Your line is open.

Speaker 11

Great. Thanks for taking the questions. Dan, in the press release, you mentioned that you'll be submitting for the 6 to 12 year old age bracket for Libervant. What data do you have or do you need to get to enable that submission to go into FDA?

Speaker 5

Yes. We did that work years ago as Thomas you probably remember. So that is strictly a paper exercise at this point.

Speaker 11

Okay. Got it. And then for the Investor Day Day coming up and maybe some of the unveiling around the Adrenaverse opportunity, I'm trying to interpret the press release. Can I read into that that you'll be unveiling additional products beyond AQST-one hundred and eight or is it more of a 108 focused presentation?

Speaker 5

Yes. Our plan is to we know we have continued to talk about ADRENAVIRUS and 108 without giving a lot of detail to you. We appreciate everyone's patience. As Steve mentioned before, intellectual property being in position is very important before you have those days. So, our one of the things we'll do as Steve mentioned is walk you through the science, because I don't think we've given you a fair view on why we're so excited about it.

Speaker 5

We will walk through the specific indication for 108, which we haven't given you yet. But in that discussion, we believe you will walk away seeing that while we're announcing 108 in an indication, there are multiple programs that could come after 108.

Speaker 11

Great. And then just one question, just a follow-up on something you said, Dan, in response to another question that you had some inbound interest in ANIFILM. Is that from a commercial partnering perspective or maybe something broader like an acquisition of the entire product? Yes. It's of the entire product?

Speaker 5

Yes, it's been across the board. So as we get closer and people other companies in our space have more of an eye towards where we are and what's happening. We've had inquiries that expand the spectrum.

Speaker 11

Got it. Appreciate taking the questions. Thank you.

Speaker 5

Thanks, Thomas.

Operator

Thank you. And our next question coming from the line of Jason Butler with Citizens JMP. Your line is open.

Speaker 8

Hi, thanks for taking

Speaker 12

the question. I just wanted to come back to the ANNO Film pediatric study. What given that you've already had dialogue with FDA about the design of the study, what's the gating factor to starting the study? And I guess that's a different way. What is it that you need to get from the pre NDA meeting to before you start that study?

Speaker 5

I'll let Carl take that one.

Speaker 7

Yes, Jason, thanks for the question. Really, it's making sure that we have alignment with the agency that the adult data set meets muster and we agree on using those data to act as a tollgate for starting the pediatric program. So that's really the one of the key critical questions we're going to secure out of the pre NDA meeting. Okay. Thank you.

Operator

Thank you. And our next question coming from the line of Gary Nachman with Raymond James. Your line is open.

Speaker 13

Hey, good morning guys. So I know you still have to meet with FDA on ANNOFILM in the Q4, but are you anticipating an adcom for ANNOFILM like NEFE had or do you think with all your conversations with FDA in support of studies that wouldn't be necessary? And since nephi could get approved on October 2nd, just what do you think the read through is there for you guys from a regulatory dip?

Speaker 5

Yes. I'll take the your second question first and then I'll hand it over to Carl to talk about the his views on the AdCom. It's always tricky to look at someone else's application and have a read through to your program, right? So our engagement with the FDA has been very open, transparent from our perspective, consistent and supportive of what we are looking to accomplish. I don't I haven't been in the discussions that the other that our competitor has had.

Speaker 5

So I think we're all looking to see on October 2, how their product fares and whether if they don't get approval, whether that's related to something that is specific to their product or something that is in the way they've interacted with the FDA. We just don't have any insight into that. In terms of the ADCOM, I'll let Karl give you his thoughts.

Speaker 7

Yes. No, thanks, Dan. Look, we believe that the program continues down a path declining risk. And whether or not the division wants to secure counsel from the advisory committee, that is the decision they have to make. I can't try and get inside the FDA's head, but I do believe that no matter what we continue to go down this path of declining risk and that's hopefully in a position of decreasing risk for NATCOM as well.

Speaker 7

But of course, I can't speak with the FDA.

Speaker 13

Okay. And then just with Libervant as you're building out that infrastructure a little bit, just talk about how you'll be able to leverage that effort potentially for ANIFILM, where there's going to be some overlap. And with respect to the inbound interest on ANIFILM, I would imagine that it's more likely to be for a primary care, someone who has a primary care capability, but maybe you could just elaborate on that a little bit, Dan.

Speaker 5

Yes. For whatever reason, Gary, I'll start with your second question again here. So of course, primary care would be an interesting addition to our capabilities for ANAFIL. It's early days in terms of any discussions that we're having. So my view would be, it will be orders of time before we have a view on what we will or won't do with someone else on the adfel.

Speaker 5

In terms of Libervant, of course, there Libervant, excuse me, there are some really nice infrastructure pieces that do tie to ANIFIL. I'll let Sherry give you her thoughts on some of those infrastructure overlaps.

Speaker 6

Yes. Obviously, it's important to start to lay up a foundation for our all of our commercial activities between sales force, marketing, will give us synergies in commercial operation. So we feel strongly that this is a really nice start for us as we prepare for the launch of the ANIFILM as well.

Speaker 13

Okay, great. Thank you very much.

Operator

Thank you. And our next question coming from the line of James Malloy with Alliance Global Partners. Your line is open.

Speaker 14

Hey guys. Thank you very much for taking my questions. Just a quick question for Ernie, just to clarify as well. So the updated guidance top line does include the $10,000,000 one timer. So excluding that for top line and EBITDA, should we just stay with the prior guidance on both those items as more sort of cash driven EBITDA and top line?

Speaker 3

Hi, Jim. So again, the amount of the deferred revenue that was recognized was non cash. We got that cash 2 years ago. So that is included in the revised guidance for 2024. That does contribute to EBITDA.

Speaker 3

But if your question is about annualizing our results or I don't know if that's exactly what you're asking. There will be some increased expenses as we get into the second half of the year around the Libervant launch activities, some increased commercials pre commercial spend for ANIFILM in addition to some other timing issues around revenue and expenses. So, I think backing out the one time revenue for that is included in both revenue and contributes to EBITDA, you could get to another number. That's not something we give.

Speaker 14

Thank you very understood. Actually it ties in with the next question too. The R and D and G and A in the current quarter, is that the number we should expect going forward or would you say that any material changes up or down on those?

Speaker 3

Well, again, some of these expenses we would expect to increase a little bit in the second part of the year, R and D and annualizing it. Remember that we do have some of these studies that are coming to a conclusion in the second part of the year. In addition, there is some of the selling expenses that is included in SG and A around the Libervant expanded launch and the pre commercial spend for Anafil would be embedded in those numbers. And all of that is included in my guidance for the our guidance for the year.

Speaker 14

Thank you. And maybe a question for Dan. Thank you, Ernie. The topical trial, could you walk through the Phase 2 trial design? And one of the things you guys talked about the Dreamiverse, the $1,000,000,000 opportunity.

Speaker 14

Could you walk through what sort of the some of the big pillars of that $1,000,000,000 opportunity could be?

Speaker 5

Jim, I want to make sure you attend our Investor Day. So I'm going to give you the teaser that that is exactly some of the things you hear at our Investor Day in the coming months. So we look forward to walking through, one way the indication that we're seeing and some of our thoughts on what the Phase IIa will look

Speaker 14

like. I'll be there with bells on. Could you walk through 108 topical gel Phase 2 trial design, please?

Speaker 3

That's Jim, just and maybe

Speaker 5

I wasn't clear, so my apologies. We're not providing that ahead of the Investor Day. That is one of the things we want to share with everyone in the context of our science, our program and where we're going. And walking through that today would be ahead of all the things we need to share with you.

Speaker 14

Understood. My apologies for missing that answer. And then we'll also on the R and D Day, when you talk about the number of reps for the ANAFILM self launch, if you should indeed self launch? And could you walk through, again, maybe this will be an R and D Day as well, The go, no go on a partner versus self launch?

Speaker 5

Yes. We will, of course, look, Anasalone is the center theme of our company at this time, right? So, we of course, in the Investor Day will start with any updates we have on ANIFILM, anything that we think is meaningful to share and how it ties to our Agroniverse technology. In terms of the sales force, I think Sherry gave you her thoughts before and her timing on how we go from where we are today to a very specific plan. Just one of the things I think is important that Sherry said is that this is a well worn path.

Speaker 5

She's done it before. She understands it. So I don't think there'll be any surprises there. In terms of any distribution agreements or alignment with other companies. Just to make sure I've clarified that, where we are today is we've had inbound inquiries.

Speaker 5

We are just beginning to think about what type of arrangement we may or may not want to have. I would say it is not imminent nor do we want it to be imminent that something like that were to be put in place. As we go through the next few quarters, those conversations will develop as will Sherry's plan and then we'll know exactly as a company where we want to place our bets, so to speak.

Operator

Thank you. I'm showing no further questions at this time. I will now turn the call back over to Dan Barber for any closing remarks.

Speaker 5

Thank you, Olivia. Well, of course, as always, we appreciate your time this morning. As you heard, we are truly excited about the progress the company has made over the last year. We're confident in our antifilm development program. We're ready to expand our sales efforts for Libervant in 2 to 5 year old space and we have meaningful in house technology to refill our pipeline.

Speaker 5

This is a great place to be. We hope you had we hope you have a great rest of your day and we look forward to our future interactions.

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Key Takeaways

  • ANIFILM progress: Completed two supportive studies, plans a pre-NDA meeting in Q4, aims to submit an NDA in December 2024–Q1 2025 and launch in late 2025/Q1 2026.
  • ANIFILM differentiation: With only 2% water content, this oral, needle-free film is designed to remain stable under extreme temperatures and fit easily in a wallet or on a phone.
  • Libervant pediatric launch: FDA-approved for ages 2–5, targeting national retail distribution by October 1, expanding to a 10-rep sales force, and projecting ~$5 million in 2025 revenue with >$100 million peak potential.
  • Adrenaverse platform: Investor Day will unveil the epinephrine prodrug technology, intellectual property and future pipeline candidates beyond AQST-108.
  • Q2 financials & guidance: Revenues rose 52% to $20.1 million (including one-time deferred revenue), net loss narrowed to $2.7 million, cash was ~$90 million, and 2024 guidance was raised to $57–60 million in revenue and a non-GAAP EBITDA loss of $20–23 million.
A.I. generated. May contain errors.
Earnings Conference Call
Aquestive Therapeutics Q2 2024
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