Q3 2021 Aquestive Therapeutics Inc Earnings Call

Good morning, and welcome to the class of Therapeutics third quarter 2021 conference call.

At this time all participants.

Operator: Thank you, operator. Good morning and welcome to today's call. On today's call, I am joined by Keith Kendall, Chief Executive Officer, and Ernie Toeuf, Chief Financial Officer, who are going to provide an overview of recent business development and performance in the third quarter of 2021, followed by a Q&A session. In total, we expect today's call to last approximately 60 minutes.

As a reminder, this call will be recorded.

I'll now like to introduce your host for today's conference call and in Watson from ICR Westlake.

Now.

Okay.

Yeah.

Thank you operator, good morning, and welcome to today's call.

On today's call I'm joined by Keith Kendall, Chief Executive Officer, and <unk>, Chief Financial Officer, who are going to provide an overview of recent business developments and performance in the third quarter 2021, followed by a Q&A session.

Operator: 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 Questiv's website within the Investors section shortly following the conclusion of this call. To remind you, the Equestive team will be discussing some non-GAAP financial measures this morning as part of its review of third quarter 2021 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 the Questus website.

Total we expect today's call to last approximately 60 minutes.

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 request as website within the investors section. Shortly following the conclusion of this call.

To remind you the requested team who will be discussing some non-GAAP financial measures. This morning as part of its review of third quarter 2021 result.

Operator: 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 factor section and in other sections included in our annual report on Form 10k filed with the Securities and Exchange Commission on March 10th, 2021, and in our quarterly reports on Form 10Q and current reports on Form 8K filed 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.

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 request its web site.

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 has described in the risk factors section and other sections included in our annual report on Form 10-K filed with the Securities Exchange.

On March 10, 2021, and then our quarterly reports on Form 10-Q, and current reports on form 8-K filed with the SEC.

As with any pharmaceutical company with product candidates under development and products being commercialized.

Operator: The impact of the ongoing COVID-19 pandemic is highly uncertain and cannot be predicted with certainty or clarity. Given these insurgencies, 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.

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.

<unk> is the ongoing COVID-19 pandemic is highly uncertain and cannot be predicted with certainty or clarity. Given these uncertainties you should not place undue reliance on these forward looking statements, which speak only as the date made.

Operator: All forward-looking statements attributable to a company 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 relief issued yesterday. The company assumes no obligation to update its forward-looking statements after the day 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 you. Thank you to everyone on the call for joining us this morning.

Actual results may differ materially from these statements all forward looking statements.

<unk>.

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.

Keith Kendall: In our remarks today, Ernie and I will be discussing recent developments in our business during the third quarter of 2021 and through early November. As always, Ernie, I will be joined by additional members of the Equestive Leadership Team during the Q&A session afterwards. It's been a very exciting few months since we last spoke to you.

With that I will now turn the line over to Keith.

Thank you to everyone on the call for joining us this morning.

In our remarks today, Ernie and I will be discussing recent developments on our business during the third quarter of 2021 and through early November.

As always <unk> will be joined by additional members of your question leadership team during the Q&A session. Afterwards.

It's been a very exciting few months since we last spoke to you through the third quarter, we executed as we committed on our key priorities for the two most important value drivers for the company.

Live event and a question of 109.

<unk> continues to progress through the review process with the FDA and we had very exciting results for <unk> 109.

We appear to have solved for the last remaining hurdle of <unk> 109 absorption speed or T Max compared to auto injectors, like Epipen and RV Q.

Current standard of care for this patient population.

Additionally, our ongoing business continues to be strong as you saw in our release last night and is there any will discuss more fully in a few minutes, we have improved our outlook and guidance for the year.

Let's start with liver fan.

We're focused on the upcoming producer date of December 23rd and the ongoing interactions with the FDA regarding the NDA for live event that was resubmitted in June.

Keith Kendall: Through the third quarter, we executed as we committed to our key priorities for the two most important value drivers for the company, Libervant and Aquestive 109. Libervant continues to progress through the review process with the FDA, and we had very exciting results for AQSP 109. We appear to have solved the last remaining hurdle of AQST109, absorption speed or TMAX, compared to auto-injectors like EpiPen and AviQ, the current standard of care for this patient population.

We continue to have multiple interactions with the FDA as they completed the mid cycle review of our application in late September.

In addition to responding to a number of information requests. The agency has concluded an audit of post marketing adverse event reporting capabilities.

They have requested and have been provided additional information about the patent coverage for the product.

The FDA has approved for use the trade name for <unk> and they have made recommendations for changes in language relating to our packaging.

Additionally, we've spoken to the FDA office of orphan products development we.

We have provided additional information supplementing our original correspondence to the group. We continue to believe that we have provided a strong set of facts supporting a finding that labor represents a major contribution to patient care and thereby a decision by the FDA clinical suite.

Keith Kendall: Additionally, our ongoing business continues to be strong. As you saw in our release last night, and as Ernie will discuss more fully in a few minutes, we have improved our outlook and guidance for the year. Let's start with Livervance.

<unk> already to prior approved products for this indication.

<unk> is an exciting product for the underserved epilepsy community and we are focused on ensuring patients have the broadest access to this product as quickly as possible.

Keith Kendall: We're focused on the upcoming PDUFA date of December 23rd and the ongoing interactions with the FDA regarding the NDA for Livervan that was resubmitted in June. We continue to have multiple interactions with the FDA as they completed the mid-cycle review of our application in late September. In addition to responding to a number of information requests, the agency has concluded an audit of post-marketing adverse event reporting capabilities.

If approved by the FDA for U S market access Lipper van it would be the first orally delivered diazepam product for the management of seizure clusters.

The patient population remains underserved with more patients over the last 12 months across all age groups continuing to utilize the diazepam rectal gel product versus the diazepam nasal products. Despite good payer coverage.

The vast majority of potential patients are still not accessing either of these difficult to interact with alternatives.

Providing our preferred method of delivery on all product that can be used where it's needed and when its needed and as the size of a postage stamp has the potential to provide a highly differentiated treatment option for this patient population.

Keith Kendall: They have requested and have been provided additional information about the patent coverage for the product. The FDA has approved the trade name for Libervant, and they have made recommendations for changes in language relating to our packaging. Additionally, we've spoken to the FDA Office of Orphan Products Development, and we have provided additional information supplementing our original correspondence to the group.

Maximizing our footprint facilitating patient access and garnering visibility across the epilepsy community are important foundational elements to our success.

We believe that every patient should have a seizure action plan with the rescue treatment available.

We believe that labor represents an attractive noninvasive and innovative product for this population.

Preparations are advancing for the commercial launch of live event, if approved by the FDA as soon as possible after that approval.

The continued commercial progress of sympathy and has laid the foundation for the launch of liver event by gaining penetration in payer coverage for our Pharmfilm based CNS products.

Keith Kendall: We continue to believe that we have provided a strong set of facts supporting a finding that Libravant represents a major contribution to patient care and thereby a decision by the FDA of clinical superiority to prior approved products for this indication. Livervant is an exciting product for the underserved epilepsy community, and we are focused on ensuring patients have the broadest access to this product as quickly as possible. If approved by the FDA for U.S. market access, Librivant would be the first orally delivered diazepam product for the management of seizure clusters.

We continue to believe liver as an important choice for epilepsy patients in a form they prefer we remain excited about and believe live event continues to be a meaningful opportunity for the company and will generate material and significant sales revenue at peak.

Our next priority is advancing our epinephrine product candidate for severe allergic reactions, including anaphylaxis <unk> 109.

As we have discussed previously we have demonstrated the ability to consistently deliver therapeutic doses of epinephrine comparable to the standard of care auto injectors.

The remaining challenge was modifying our formulation to achieve the absorption rate necessary to produce a T. Max equally comparable to those auto injectors.

Based on the top line data released just last week from our first in human Phase one PK clinical trial for a U S. T. One O nine we believe we have met that hurdle.

Keith Kendall: The patient population remains underserved, with more patients over the last 12 months across all age groups continuing to utilize the Diasopam rectal gel product versus the Diasopam nasal products despite good payer coverage. However, the vast majority of potential patients are still not accessing either of these difficult to interact with alternatives.

The formulations tested during the trial resulted in <unk> of 15 minutes comparable to the auto injectors and within a narrower range than the published data for those products.

<unk> if approved will be the first orally administered epinephrine based treatment for anaphylaxis with safety Tolerability PK and PD measures falling within the target range of the standard of care auto injectors.

Keith Kendall: Providing a preferred method of delivery, an oral product, that can be used where it's needed and when it's needed, and is the size of a postage stamp has the potential to provide a highly differentiated treatment option for this patient population. Maximizing our footprint, facilitating patient access, and garnering visibility across the epilepsy community are important foundational elements to our success. We believe that every patient should have a seizure action plan with rescue treatment available.

<unk> 109 has the potential to be a transformative treatment for patients in this population, especially those who don't carry their medications regularly because they are resistant to injections, we don't find the devices easy to use or carry.

This is another example of how our knowledge and technology can create value through a better treatment alternative that can be used where it's needed when it's needed and in a form oral that is preferred by most patients.

We're very excited by these findings and continue to believe that patients will embrace this needle free user friendly alternative should it be approved by the FDA and other regulators around the world.

Keith Kendall: We believe that Libravant represents an attractive, non-invasive, and innovative product for this population. Preparations are advancing for the commercial launch of Libervant if approved by the FDA as soon as possible after that approval. The continued commercial progress of Simpazan has laid the foundation for the launch of Libervant by gaining penetration and payer coverage for our farm film-based CNS products. We continue to believe Libervant is an important choice for epilepsy patients in a form they prefer.

We plan to commence a second adaptive design study that will compare the PK and PD of our target formulation against epinephrine injection in Canada during the fourth quarter of 2021.

This study will be used to determine the final formulation and dosage strengths that would be used to manufacture registration batches and conduct pivotal PK studies in 2022.

We have submitted our data package for the pre IND meeting with the FDA and anticipate receiving a written response from the agency before the end of the year.

We anticipate that this feedback will provide us with greater insights as we plan for the development of <unk> T. One O nine under the $505 two pathway and begin to enter pivotal trials in the U S next year.

Next symposium sympathetic continued to perform well in the third quarter of 2021, which marked its 11th period of quarter over quarter growth.

Keith Kendall: We remain excited about and believe Libervan continues to be a meaningful opportunity for the company and will generate material and significant sales revenue at this. Our next priority is advancing our epinephrine product candidate for severe allergic reactions, including anaphylaxis, QST109. As we have discussed previously, we have demonstrated the ability to consistently deliver therapeutic doses of epinephrine comparable to the standard of care autoinjection. The remaining challenge was modifying our formulation to achieve the absorption rate necessary to produce a PMAX equally comparable to those auto-injectors.

<unk> continues to set the stage for a potential launch of liver van.

We have always thought it valuable to have two complementary products available to a common set of prescribers with <unk>, leading the way prior to a potential launch of live event.

We feel that our commercial team with their efforts on Suzanne has done a good job of establishing our footprint.

In conclusion, as we progressed through the fourth quarter and head towards 2022, we're focused on advancing our proprietary products. Our team is continuing to engage with the FDA regarding the NDA for live event ahead of the December <unk> date.

Launch preparations are advancing and if approved by the FDA, we plan to launch shortly after market access is granted.

A question of 109 reported exciting top line data and we're moving to a new study to determine final formulation and dose strength before year end. We also anticipate from feedback from the FDA regarding our pre IND meeting data package before the end of December.

Our ongoing business continues to perform well and we look forward to delivering the strong results we have guided to here today.

Keith Kendall: Based on the top-line data released just last week from our first inhuman phase 1 PK clinical trial for QST109, we believe we have met that hurdle. Formulations tested during the trial resulted in T-Max of 15 minutes, comparable to the auto-injectors and within a narrower range than the published data for those products.

We look forward to continuing to update all of you as we advance all of these initiatives throughout the fourth quarter and as we head into next year.

With that I'd like to turn the line over to Ernie who will provide specifics on our financial performance capital access strategy and outlook.

Thank you Keith and good morning, everyone.

By now you will have seen our financial results and our 10-Q and earnings release that were filed last evening.

Keith Kendall: AQST 109, if approved, will be the first orally administered epinephrine-based treatment for anaphylaxis with safety, tolerability, PK, and PD measures falling within the target range of the standard of care auto-injection. AQST 109 has the potential to be a transformative treatment for patients in this population, especially those who don't carry their medications regularly because they are resistant to injection This is another example of how knowledge and technology can create value through a better treatment alternative that can be used where it's needed, when it's needed, and in a form, oral, that is preferred by most patients.

As we typically do we will address most of the discussion related to the third quarter 2021 results in the Q&A.

Complementing our focus on the priorities of liver event and <unk> 109, Keith just discussed has been a strong financial focus this year, including extending the time that we have access to an additional $30 million available within our existing debt facility until <unk>.

June 2023, if we choose to fully fund the launch of liver event, if approved by the FDA for U S market access.

Updating the agreement with our lenders to amend the principal amortization schedule to free up over $10 million of capital between now and year end 2022 for a $2 7 million dollar fee payable in four quarterly installments, beginning may 15th 2022.

And continued strong performance of our existing business and business development activities as well as prudent expense management and diligently managing our cash position in order to not only improve results as our revised guidance indicates but also extending our capital horizon.

Keith Kendall: We're very excited by these findings and continue to believe that patients will embrace this needle-free, user-friendly alternative should it be approved by the FDA and other regulators around the world. We plan to commence a second adaptive design study that will compare the PK and PD of our target formulation against epinephrine IM injection in Canada during the fourth quarter of 2021. This study will be used to determine the final formulation and dosage strength that will be used to manufacture registration batches and conduct pivotal PK studies in 2022.

Our total revenues were $13 3 million in the third quarter 2021, compared to $8 $3 million in the third quarter 2020.

Comparing the third quarter 2021 to the prior period. The company saw an 18% increase in <unk> net revenue. Despite the continued market access limitations due to COVID-19, and a 77% increase in manufacturer and supply revenue.

Our net loss for the third quarter, 2021 was $14 6 million or <unk> 37 loss per share.

The net loss for the third quarter 2020 was $16 $6 million were <unk> 49 loss per share.

This year over year change in net loss was driven by higher revenue lower costs and expenses offset by an increase in noncash interest expense related to the kind <unk> monetization transaction, which does not represent a cash output or monetary obligation at any time during the life of the transaction.

Keith Kendall: We have submitted our data package for the pre-I&D meeting to the FDA and anticipate receiving a written response from the agency before the end of the year. We anticipate that this feedback will provide us with greater insights as we plan for the development of AQST109 under the 505B2 pathway and begin to enter pivotal trials in the U.S. next year.

<unk>.

Non-GAAP adjusted EBITDA loss was $5 3 million in the third quarter 2021, compared to $11 3 million in the third quarter 2020.

The year over year change in non-GAAP, adjusted EBITDA was driven by higher revenue lower costs and expenses offset by an increase in noncash interest expense related to the <unk> monetization agreement again, which does not represent a cash output or monetary obligations at anytime.

Keith Kendall: Simpizan continued to perform well in the third quarter of 2021, which marked its 11th period of quarter over quarter growth. It continues to set the stage for a potential launch of Libervan. We have always thought it valuable to have two complementary products available to a common set of prescribers, with Simphazan leading the way prior to a potential launch of Libervan. We feel that our commercial team, with their efforts on Sipazan, has done a good job of establishing our footprint.

During the life of the transaction.

As of September 32021, cash and cash equivalents were $31 $2 million.

During the third quarter 2021, we received $6 1 million in net proceeds from our at the market or ATM facility.

And a $1 million to $5 million net milestone to co develop and provide commercial product for a potential to Dow for oral <unk>.

Keith Kendall: In conclusion, as we progress through the fourth quarter and head toward 2022, we're focused on advancing our proprietary products. Our team is continuing to engage with the FDA regarding the NDA for Libravant ahead of the December Padoufa date. Launch preparations are advancing, and if approved by the FDA, we plan to launch shortly after market access is granted. Equestive 109 reported exciting top-line data, and we're moving to a new study to determine final formulation and dose strength before year end. We also anticipate feedback from the FDA regarding our pre-I&D meeting data package before the end of December.

<unk> product for the treatment of erectile dysfunction, all of which were partly offset by cash used in operations.

We expect that our existing cash and cash equivalents.

Revenue from our ongoing business, including symposium, continuing business development activities and prudent expense management actions combined with ATM activity will provide adequate funds and meet expected cash requirements for the next 12 months.

While we have not been accessing the ATM recently it remains an important tool to support the capital needs of the company.

Separately, we expect the potential launch of liver event, if approved by the FDA for U S market access to be funded by the additional $30 million of contingent funds available as part of the existing 12, 5% notes.

Keith Kendall: Our ongoing business continues to perform well, and we look forward to delivering the strong results we have guided to here today. We look forward to continuing to update all of you as we advance all of these initiatives throughout the fourth quarter and as we head into next year. With that, I'd like to turn the line over to Ernie, who will provide specifics on our financial performance, capital access strategy, and outlook. Thank you, Keith, and good morning, everyone.

Looking beyond we prevent we expect royalty streams from license agreements to contribute to our future revenue.

These royalty streams include as Taurus, which was recently launched by Corium under license from Ken Farm.

The box zone in markets outside of the U S with <unk> extra van and the U S with Mitsubishi Tanabe and in the EU with them bone as well as potential additional payments available under the <unk> monetization agreement.

As outlined in the press release issued last night after market close we are improving our full year 2021 financial guidance.

Ernie Toeuf: By now, you will have seen our financial results in our 10Q and earnings release that were filed last evening. As we typically do, we will address most of the discussion related to the third quarter 2021 results in the Q&A. Complementing our focus on the priorities of Libervant and AQST 109 that Keith just discussed has been a strong financial focus this year, including extending the time that we have access to an additional $30 million available within our existing debt facility until June 2023, if we choose to fully fund the launch of Liberbant, if approved by the FDA for U.S. market, updating the agreement with our lenders to amend the principal amortization schedule to free up over $10 million of capital between now and year-end 2022 for a $2.7 million fee payable in four quarterly installments beginning May 15, 2022, and continued strong performance of our existing business and business development activities, as well as prudent expense management and diligently managing our cash position in order to not only improve results, as a revised guidance indicates, but also extending our capital horizon.

<unk> growth the performance of our manufacturing and supply operations and our other ongoing business activities generated strong operating results during the first three quarters of 2021.

Moreover, we have taken steps to continue to strengthen our capital position.

As such we have updated our full financial expectations as follows.

Total revenues of approximately $47 million to $49 million increase from $46 million to $48 million in the prior guidance.

Non-GAAP adjusted gross margin of approximately 70% to 75% unchanged from prior guidance and non-GAAP adjusted EBITDA loss of approximately $32 million to $34 million improved from 39% to $42 million in the prior guidance.

It is worth reiterating that this updated 2021 financial guidance does not include any revenues from <unk>, which has a <unk> target go date of December 23 2021.

With that I will now turn the line back to the operator to open the volume for questions.

If you would like to ask a question. Please press Star then one.

If your question has been answered and you'd like to remove yourself from the queue.

Keith.

Our first question comes from Gary Nachman with BMO capital markets. Your line is open.

Ernie Toeuf: Our total revenues were $13.3 million in the third quarter of 2021, compared to $8.3 million in the third quarter of 2020. Comparing the third quarter of 2021 to the prior period, the company saw an 18% increase in Sympazan net revenue, despite the continued market access limitations due to COVID-19, and a 77% increase in manufacturing and supply revenue. Our net loss for the third quarter of 2021 was $14.6 million, or 37 cents a loss per share.

Hi, This is <unk> filling in for Gary Nachman, Thanks for taking my question.

And congratulations on all the progress.

So regarding liver van and <unk> for market access would you be able to shed some more color on what additional information on market data you shared with the orphan drug group and are you still confident you'll be able to get.

Around the same time as a potential approval.

A few follow ups after this as well.

Thanks This is Keith.

Thanks for the question, we still do think that the decisions will come at the same time, although we don't control either of them as you know.

But we do believe based on the way this product has been prosecuted both in our filing and others that the decision will come at the same time.

We did augmented data we're not for I think reasons that are fairly well understood not going to talk.

Publicly about what that additional data was until after the agency makes their decision.

Ernie Toeuf: The net loss for the third quarter of 2020 was $16.6 million, or 49 cents lost per share. This year-over-year change in net loss was driven by higher revenue, lower costs, and expenses, offset by an increase in non-cash interest expense related to the KynMobi monetization transaction, which does not represent a cash output or monetary obligation at any time during the life of the transaction. Non-Gap adjusted EBITDA loss was $5.3 million in the third quarter 2021 compared to $11.3 million in the third quarter 2020.

Got it.

And regarding.

<unk> 109 phase one PK results.

How comfortable are you with the medium team that 15 minutes for the target USD one nine formulation.

Compared to Epipen, Avi accused began CNET and any intention on trying to improve that as well.

I'll, let Dan Barber respond to that for you Evan.

Morning, Evan how are you nice to hear your voice.

That's an easy question, we feel great about our median T. Max our median T. Max is 15 minutes the two auto injectors on the market.

Our epipen is at 10 and <unk> is at 20, so we're right between the auto injectors.

Even more importantly, when you look at our median T. Max.

Ernie Toeuf: The year-over-year change in non-gap-adjusted EBADA was driven by higher revenue, lower costs, and expenses, offset by an increase in non-cash interest expense related to the Kynmobi monetization agreement, which does not represent a cash output or monetary obligation at any time during the life of the transaction. As of September 30th, 2021, cash and cash equivalents were $31.2 million.

We're actually at the low end of the range for medium T. Max So when you look at an auto injector their range of possible <unk> outcomes goes up to 60 or 90 minutes or product.

Farthest out T. Max we saw was well below that so we think we're in a great place for medium TNX, we do not believe up for our SDA.

Finally, we need to be any faster than we are but of course, we will continue to develop the product as we go forward.

Ernie Toeuf: During the third quarter of 2021, we received $6.1 million in net proceeds from our at-the-market or ATM facility and a $1.25 million net milestone to co-develop and provide commercial product for a potential Dowell-ofilm product for the treatment of erectile dysfunction, all of which were partly offset by cash used in operations. We expect that our existing cash and cash equivalents, revenue from our ongoing business, including Sympazan, continuing business development activities, and prudent expense management actions combined with ATM activity will provide adequate funds and meet expected cash requirements for the next 12 months.

Youll see that median <unk> continue to be a differentiator for our product.

Great.

More follow up for me.

Would you be able to provide some more color on what's formulation to be taking forward from the phase one PK trial.

That's being evaluated crossover study.

We'd be tested all the formulations.

Okay study or just the target formulation.

No.

Another great question. So we will take the target formulation forward and we disclosed last week, the <unk> formulations simply to show.

The breadth of data, we had created and that no matter, which formulation you look at we had really solid results with a really good median feedbacks, but the target formulation will be the one that we take forward and the the next study.

Ernie Toeuf: While we have not been accessing the ATM recently, it remains an important tool to support the capital needs of the company. Additionally, we expect the potential launch of Libervant, if approved by the FDA for U.S. market access, to be funded by the additional $30 million of contingent funds available as part of the existing 12.5% note. Looking beyond Leverbent, we expect royalty streams from license agreements to contribute to our future revenue. These royalty streams include Astaris, which was recently launched by Corium under license from Ken Farm, Suboxone in markets outside of the U.S. with Indivir, Ex-Van, in the U.S. with Mitsubishi-Kinabi, and in the EU with Zambon, as well as potential additional payments available under the Kynmobi Modernization Agreement

To define not only the final commercial formulation for us, but also the dosage strength that we think.

Best fits the comparison to the reference product.

Great. Thanks for taking my questions.

Yes.

Our next question comes from Jason Butler with JMP Securities. Your line is open.

Hi, Thanks for taking the questions.

And youre not.

Not going to go into a ton of detail on the FDA interactions on leather event.

Just wanted to ask yes.

Our actions with FDA.

All focused on the core.

Substance of these <unk> and the <unk>.

Modeling work you did to address the fda's questions and whether you still feel comfortable about your strategy to address the fda's questions.

Yes, Jay.

How are you doing today, thanks for the question.

We're very comfortable.

I've actually asked us to extend the model to some of the groups that the.

Ernie Toeuf: As outlined in the press release issued last night after the market closed, we are improving our full-year 2021 financial guide. Sympazan growth, the performance of our manufacturing and supply operations, and our other ongoing business activities generated strong operating results during the first three quarters of 2021.

The dosing doesn't cover.

So we've had.

Some questions, but none that would cause us to believe that they're questioning the model or that the model isn't the right path to the dosing recommendations that we made.

Great and then on <unk> nine.

The data looks really good.

Late last week.

But the target profile looks to be the.

Really compelling so can you talk a little bit about what the goals of the crossover trial were are in terms of finding that final formulation or are there significant improvement in the target profile that youre trying to achieve here and then can you just talk about the other components. The adaptive component of the trial and what that can how that can benefit you.

Ernie Toeuf: Moreover, we have taken steps to continue to strengthen our capital position. As such, we have updated our full financial expectations as follows. Total revenues of approximately $47 to $49 million increased from $46 to $48 million in the prior guidance, Non-Gap adjusted gross margin of approximately 70% to 75% unchanged from prior guidance, and non-gap adjusted EV loss of approximately $32 to $34 million improved from $39 to $42 million in the prior guidance. It is worth reiterating that this updated 2021 financial guidance does not include any revenues from Liebervent, which has a PDUFA target go date of December 23, 2021. With that, I will now turn the line back to the operator to open the line for questions.

And if you decided what the comparator arm will be at this point.

Okay. Thank.

Thank you Jason.

So yes, we're taking the target formulation into the adaptive study design.

In terms of formulation work at this point we.

While we're saying we're dialing in on the final formulation, we basically have the final formulation. So this next study is to really dial in on very very minor changes in formulation and the final dosage strength.

In terms of how the study is put together.

The first stage of the study will compare different dosage strengths and then we'll take the final dosage strength that we like the most and compare that to our reference product and the second part of the study are referenced product at this point is open so we have opportunities across the variety.

Injectors available and I think youll see us make that choice once we get to the second part of the study.

Operator: If you would like to ask a question, please press star than one. If your question has some answers and you'd like to remove yourself from the queue, press the pound key. Our first question comes from Gary Knoxman with BMO Capital Markets. Your line is open.

Okay, great. Thanks for taking the questions.

Our next question comes from Thomas Flaten with Lake Street Capital. Your line is open.

Evan Flaw: Hi, this is Evan Flaw filling in for Gary Nackben. Thanks for taking my questions, and congratulations on all the progress. So regarding Libravant and potential ODE for market access,

Hey, guys. Thanks for taking the questions Dan just to follow up on your last response could you just give us some some thinking behind what would cause you to choose one injector over the other from a comparative perspective.

Sure.

It comes down to the regulatory nuance right. So from a commercial perspective, we don't think it's particularly.

Evan Flaw: For market access, would you be able to share some more color on what additional information or market data you share with the orphan drug group and are you still confident that you'll be able to get potential ODE around the same time as potential approval? I have a few follow-up questions. Hey Evan, thanks. This is Keith.

Particularly matters what are referenced product is but when we think about our interactions with the FDA will look at the profiles of Epipen of EQ. The manual injectors and will make our choice based on which one of those we think provide.

<unk> provides the cleanest and clear path with the regulators I don't think theres any more magic to it than that.

Got it.

And then there was no mention of <unk> 108 in the press release or in the prepared comments could you give us a.

A status update on that.

Sure.

Commerce, we wanted to stay focused on the two things right in front of us at <unk> eight has utility beyond anaphylaxis.

Keith Kendall: Thanks for the question. We still think that the decisions will come at the same time, although we don't control either of them, as you know, but we believe based on the way this product has been prosecuted both in our filing and others, that the decisions will come at the same time. We did augment the data where necessary, but for reasons that are fairly well-understood. We understood not to talk publicly about what that additional data was until after the agency made their decision.

And we're doing work behind the scenes to flesh that out when it's appropriate we'll talk more about it right now our focus is on 109, obviously with the amount of conversation we've had in the last week and the.

Great results we've had.

And the continuing work with the agency on liver event moving toward the December <unk> date.

Got it and just one quick final one on guidance.

There is the the guidance implies a significant downtick in revenues in the fourth quarter is that just <unk>.

Conservatism or is there something that youre anticipating there that would drive the revenues down over the third quarter.

Evan Flaw: Regarding ACTS-T-109, the phase 1, PK results, how comfortable are you with the medium?

I don't think hi, Thomas its Ernie I don't think its really revenue going down in the fourth quarter, It's really true up the revenue for the full year as you see in our our full year guidance certainly the increased manufacturing and supply revenue was.

Daniel Barber: Are you with the Medium Team Max of 15 minutes for the target AQSD109 formulation compared to EpiPen and Avi Q's Median TNets, and any intention of trying to prove that as I'll let Dan Barber respond to that for you, Evan? Morning, Evan. How are you? Nice to hear your voice.

It's more skewed towards the increase was more skewed to the second and third quarter of this year, but I think the key point is that we are.

Upping, our upping our guidance are expanding the range for the full year and we feel very confident about that.

Daniel Barber: That's an easy question. We feel great about our median T-Mex. Our median T-Max is 15 minutes. The two auto-injectors on the market, our EpiPen is at 10 and OVQ is at 20, so we're right between those two. Even more importantly, when you look at our median T-Max, we're actually at the low end of the range for medium T-Mex. So when you look at an auto-injector, their range of possible T-Max outcomes goes up to 60 or 90 minutes.

Got it thanks for taking the questions much appreciated.

Our next question comes from Andreas <unk>.

With Wedbush Your line is open.

Good morning, guys. Thanks for taking our questions just two quick ones from us So regarding Liberty then.

When might you guys provide.

More detail on the commercial launch pricing et cetera, and then maybe a quick update on <unk>.

And.

Update on the rollout so far.

Thanks.

Sure so we.

We are preparing to launch.

<unk> event, we're going through the early conversations with payers we are.

Going through the search for sales and medical Affairs people now so that once we get notice of approval should that come that were ready to move as you know we've got a sales force in place.

That are calling on many of the doctors, who will be the prescribers of <unk> and we intend to use them.

First and foremost as soon as we if we do get that approval.

We'll talk more about our launch plan I suppose once we have a launch to two launch but.

We're doing those things now so that we're prepared as soon as we hear from the agency in.

December one way or the other.

In terms of extra van I'll, let Dan give you a brief update on where that is with our partners around the world sure. Thanks, Keith and Andreas as I'm sure you.

Daniel Barber: Our product, the farthest out TMAX we saw was well below that. So we think we're in a great place for Medium TMEX. We do not believe for our FDA filing, we need to be any faster than we are, but of course, we'll continue to develop the product as we go forward, and you'll see that median TMAX continues to be a differentiator for our product.

I'm sure you know our focus is highly on liver and <unk> 109, but.

In our film part of our business, we do continue to have.

Solid growth as Ernie talked about before and part of that growth story is the rollout of <unk>.

Evan Flaw: Great. And one more follow-up for me. Would you be able to provide some more color on which formulations you'll be taking forward?

We our partner Mitsubishi Tanabe here in the U S is detailing accident.

<unk> continues to see that as an important product in their ALS.

Evan Flaw: from the Phase 1 PK trial that's being evaluated in the crossover study.

Call point.

We also continue to.

Focus on the launch of accident in Europe, which will happen at some point late next year. So <unk> continues to be a nice <unk>.

Daniel Barber: We'd be testing all the formulations from the casehold

Daniel Barber: just from a P-K study or just a target No, another great question. So we will take the target formulation forward. And we disclosed last week the four formulations simply to show the breadth of data we had created and that no matter which formulation you look at, we had really solid results with a really good median PMAX. But the target formulation will be the one that we take forward. And the next study will define not only the final commercial formulation for us but also the dosage strength that we think best fits the comparison to the reference process.

Graham behind the main programs of the company.

Alright, great.

Congrats on all the blood vessels.

As a reminder to ask a question. Please press Star then one.

Our next question comes from Ron <unk> with.

With H C. Wainwright your line is open.

Hi, Thanks, very much for taking my questions can you hear me yes.

Yes, thanks, Rob.

Okay first of all just wanted some additional clarity if you can provide us on weather.

Whether you have started labeling discussions with the FDA on liver events.

And if indeed that sort of contiguously picked up where you had left off.

At the time of the receipts of the CIL and if theres any other color you can provide regarding the nature of those labeling discussions at this time also as they haven't resumed when might you expect them to resume.

Evan Flaw: Great, thanks for taking that question.

Operator: Our next question comes from Jason Butler with J&P Security. Your line is open. Hi, thanks for taking the

As a follow on from that from a commercial.

Jason Nicholas Butler: Hi, thanks for taking the questions and acknowledging you're not going to go into a ton of detail on the FDA interactions with Lebervent. Just wanted to ask if the interactions with FDA, I'll focus on the core substance of the CRL and the modeling work you did to address the FDA's questions and whether you still feel comfortable about your strategy to address the FDA's questions. Yeah, Jason, how are you doing today? Thanks for the question. We're very comfortable.

Perspective, assuming that liver, Brian received timely regulatory approval when you look at the current.

State of the target market.

As the nasal spray and to what extent do you think it could constitute.

A hurdle to commercial uptake of labor event or do you think that it is not really likely to be an obstacle.

So let's take those one at a time.

We have had interactions with the agency, where they have recommended language changes to our packaging in terms of the main label. We it's probably too early for us to expect to engage in those I think we would start looking for.

Keith Kendall: They've actually asked us to extend the model to some of the groups that the dosing doesn't cover. So we've had some questions, but none that would cause us to believe that they're questioning the model or that the model isn't the right path to the dosing recommendation that we made. Great.

For those conversations to be three four weeks out from the <unk> date.

But they are paying attention they did give us language changes on our packaging both on each individual strip and on the box.

They'll come in.

And in terms of the market look for the last 12 months more patients have chosen to continue to use the rectal gel then they have the nasal spray.

And about.

Jason Nicholas Butler: And then on AQST109, you know, data looked really great last week, and, you know, the target profile looks to be really compelling. So can you talk a little bit about what the goals of the crossover trial were, in terms of finding that final formulation? Are there significant improvements in the target profile that you're trying to achieve here? And then can you just talk about the other components, the adaptive components to the trial, and how that can benefit you, and if you've decided what the comparator arm will be at this point? Yeah, go ahead there. Thank you, Jason.

About 90% of the potential patient population is still not accessing unappropriate rescue medication, either nasal or rectal.

That doesn't change the fact that will be the third product to the market. However, we believe that.

The product were bringing to the market and an oral form that can.

Can be carried and use the way the film can.

Is going to give people a much better opportunity to have what they need where they need it and when they need it and in a form they liked interacting with.

So we feel good about the competitive valuation competitive value proposition our product brings to these patients, but we are <unk> to the market and we'll have to deal with that.

Okay. Thank you and with respect to 109 and 108 for 109 I was just wondering if you could walk us through the registration batch manufacturing timeline and for 100 weight I understand that you are looking to position. This in markets that are.

Daniel Barber: And so, yeah, we're taking the target formulation into the adaptive study design. In terms of formulation work, at this point, while we're saying we're dialing in on the final formulation, we basically have the final formulation. So this next study is to really dial in on very, very minor changes in formulation and the final dose of strength. In terms of how the study's put together, the first stage of the study will compare different dosage strengths, and then we'll take the final dosage strength that we like the most and compare that to our reference product in the second part of the study.

Effectively complementary to the 109 target market target population, but I was wondering if you could elaborate a little bit on what those target markets are likely to be for 100 weight.

Sure Dan you want to go ahead sure. Good morning, Rob in terms of the registration batches right now we see those occurring in the middle of 2022.

Daniel Barber: Our reference product at this point is open, so we have opportunities across the variety of injectors available. And I think you'll see us make that choice once we get to the second part of the. Okay, great. Thanks for taking the questions.

So with the adaptive study design that we've talked about before.

We will want to get to our final dose strength, obviously before we do the manufacturing scale up process and get to those batches, having said that the process. We are using for making the film while the film itself has.

Operator: Our next question comes from Thomas Flatton with Lake Street Capital. Your line is open.

Very unique technology in it that is very strongly protected the actual manufacturing process is straightforward so.

Thomas Flaten: Hey guys, thanks for taking the questions. Dan, just to follow up on your last response, thinking behind what would cause you to choose one injector over the other from a comparator?

So we don't see that Dean.

Anything other than getting through to the final dose that we will.

That we will make our registration batches on.

Daniel Barber: Sure, I think it comes down to regulatory nuance, right? So from a commercial perspective, we don't think it particularly matters what our reference product is. But when we think about our interactions with the FDA, we'll look at the profiles of EpiPen, OVQ, and the manual injectors, and we'll make our choice based on which one of those we think provides the cleanest and clearest path to compliance with the regulations. I don't think there's any more magic to it than that.

In terms of 108 as Keith.

Keith has pointed out before in public comments.

Do see.

Alternate indications complementary as you put it in the allergy space for that product we are pursuing.

Working on understanding those indications and understanding the fda's requirements around those indications right now and when we get to the right place, we will be talking more about them, but we do see utility in one way.

Thomas Flaten: Got it. And then there was no mention of AQST 108 in the press release or in the prepared comments. Could you give us a status update? Sure, Thomas. We want to stay focused on the two things right in front of us. AQST 108 has utility beyond anaphylaxis, and we're doing work behind the scenes to flesh that out. When it's appropriate, we'll talk more about it.

We're excited to continue to work on that product.

In a different indication other than anaphylaxis.

So just doesn't clarify katori point those indications for 100 weight are actually not indications for which either you or the epipen. Our currently approved is that correct.

Correct.

Great and just one other question with respect to future financial guidance I was just wondering if you could give us a sense of when you might be in a position to provide financial guidance for 2022, and if you anticipate qualitatively doing the same thing in 2022.

Ernie Toeuf: Right now, our focus is on 109, obviously, with the amount of conversation we've had in the last week and the great results we've had, and the continuing work with the agency on Libravant moving toward the December Padoufa date. Got it, and just one quick final one on guidance. The guidance implies a significant down-tick in revenues in the fourth quarter. Is that just conservatism, or is there something that you're anticipating there that would drive the revenues down?

You have done historically, which is to provide sort of a wider guidance range at the beginning of the year and narrow it go forward.

Go ahead, Sir Hi, Rob its earnings certainly.

The guidance for 'twenty, two is going to depend on what happens on December 23.

So we would hope that anchors.

As we reiterated in my statements none of our guidance for this year has anything any revenue in our contemplated any revenue for whoever band.

An approval. So we would expect that based on the events at the end of the year, we get approval that we would.

Ernie Toeuf: Now, I don't think, hi Thomas, it's Ernie. I don't think revenue is really going down in the fourth quarter. It's really truing up revenue for the full year, as you see in our full year guidance. Certainly, the increased manufacturing and supply revenue was more skewed towards the increase, was more skewed to the second and third quarter of this year. But I think, you know, the key point is that we are, you know, up in our guidance. expanding the range for the full year, and we feel very confident about that. Thanks for taking the question so seriously.

<unk> guidance in the same manner that we've done in the past with a wider range.

Thank you.

There are no further questions I'd like to turn the call back over to Keith Kendall for any closing remarks.

Well. Thank you everyone. It's for US certainly been a very exciting.

Quarter, we've got a lot of hard work coming to a place that we feel good about we're going to continue obviously to work with the FDA on liver of amp as that progresses through its process.

We've got some near term events and epinephrine that we'll look forward to talking about as we go through those as well.

And we.

Look forward to finishing out the year and meeting the guidance that we've given everyone. We appreciate you taking the time to talk with US today. We appreciate your questions and we look forward to speaking again shortly thank you all and have a great day.

This does conclude the program you may now disconnect.

[music].

Operator: Our next question comes from Andreas Argyz on behalf of Wedbush. Your line is open.

Andreas Argyrides: Good morning, guys. Thanks for taking our questions. Just two quick ones from us. So, you know, regarding Libervans, when might you guys provide a bit more detail on the commercial launch, pricing, etc.? And then maybe a quick update on Excervan and an update on the rollout there so far. Thank you.

Keith Kendall: Sure, so we're preparing to launch Libervant. We're going through the early conversations with payers. We are going through the search for sales and medical affairs people now so that once we get notice of approval, should that come, we're ready to move. As you know, we've got a sales force in place that is calling on many of the doctors who will be the prescribers of Libravant, and we intend to use them first and foremost as soon as we if we do get that approval.

Keith Kendall: So we'll talk more about a launch plan, I suppose, once we have a product to launch. But we're doing those things now so that we're prepared as soon as we hear from the agency in December, one way or the other. In terms of Excervan, I'll let Dan give you a brief update on where that is with our partners around the world. Sure. Thanks, Keith.

Daniel Barber: And Andreas, I'm sure you know our focus is highly on Libervin and AQSD 109. But in the film part of our business, we do continue to have solid growth, as Ernie talked about before. and part of that growth story is the rollout of Excerven. Our partner, Mitsubishi Tanabi, here in the U.S., is promoting Excervin and continues to see that as an important product in their ALS call point. We also continue to focus on the launch of Excerven in Europe, which will happen at some point late next year. So X-Event continues to be a nice side program behind the main program.

[music].

Andreas Argyrides: All right, great. Thanks, guys, for the update. And congrats on all the progress.

Operator: As a reminder, to ask a question, please press Star Than 1. Our next question comes from Lam, Savalahu, with H.C. Wayne Wright. Your line is open.

Lam Savalahu: Hi, thanks very much for taking my questions. Can you hear me?

Operator: Yes, thanks, Ron. Okay, first of all, just wanted some additional clarity if you could provide it on, uh,

Lam Savalahu: Okay, first of all, just wanted some additional clarity if you could provide it on whether you have started labeling discussions with the FDA on Libervant, and if it indeed picked up where you had left off at the time of the receipt of the CRL, and if there's any other color you can provide regarding the nature of those labeling discussions at this time. Also, if they haven't resumed, when might you expect them to resume? and as a follow-on from that, from a commercial perspective, assuming that Livermore receives timely regulatory approval.

Lam Savalahu: When you look at the current state of the target market, how entrenched is the nasal spray and to what extent do you think it could constitute a hurdle to commercial uptake of Leverand, or do you think that it's not really likely to be an obstacle? Thank you.

Keith Kendall: So let's take those one at a time. We have had interactions with the agency where they have recommended language changes to our packaging. In terms of the main label, it's probably too early for us to expect to engage in those. I think we would start looking for those conversations three, four weeks out from the Padufa date. But they are paying attention.

Keith Kendall: They did give us language changes in our package, both on each individual strip and on the box that they'll come in. In terms of the market, look, for the last 12 months, more patients have chosen to continue to use the rectal gel than they have the nasal spray. And about 90% of the potential patient population is still not accessing an appropriate rescue medication, either nasal or rest of the That doesn't change the fact that this will be the third product on the market.

Keith Kendall: However, we believe that the product we're bringing to the market in an oral form that can be carried and used the way the film can is going to give people a much better opportunity to have what they need, where they need it, and when they need it, and in a form they like interacting with. So we feel good about the competitive value. the competitive value proposition our product brings to these patients. But we are third in the market, and we'll have to deal with that.

Lam Savalahu: Okay, thank you. And with respect to 109 and 108, for 109, I was just wondering if you could walk us through the registration batch manufacturing timeline. And for 108, I understand that you are looking to position this in markets that are effectively complementary to the 109 target market and target-facing population. But I was wondering if you could elaborate a little bit on what those target markets are likely to be. 108. Dan, do you want to go ahead? Sure. Good morning, Rom.

Daniel Barber: In terms of the registration batches, right now, we see those occurring in the middle of 2022. So with the adaptive study design that we talked about before, we will want to get to our final dose strength, obviously before we do the manufacturing scale-up process and get to those batches. Having said that, the process we're using for making the film, while the film itself has very unique technology in it that is very strongly protected, the actual manufacturing process is straightforward.

Daniel Barber: So we don't see that being anything other than getting through to the final dose that we will make our registration batches on. In terms of 108, as Keith has pointed out before in public comments, we do see alternate indications complementary, as you put it, in the allergy space for that product. We're pursuing, working on understanding those indications and understanding the FDA's requirements around those indications right now, and when we get to the right place, we'll be talking more about them.

[music].

Daniel Barber: But we do see utility in 108, and we're excited to continue to work on that product, albeit in a different indication other than Anna Follinger. So just as a clarification point, those indications for 108 are actually not indications for which either all the Q or the EpiPen are currently approved. Is that correct? Yes, that's correct.

Lam Savalahu: Great. And just one other question with respect to future financial guidance. I was just wondering if you could give us a sense of when you might be in a position to provide financial guidance for 2022 and if you anticipate qualitatively doing the same thing in 2022 that you've done historically, which is to provide sort of a wider guidance range at the beginning of the year and narrow it as you go forward. Go ahead. Well, a certain, hi, Ramos, Ernie.

Ernie Toeuf: Certainly, you know, the guidance for 22 is going to depend on what happens on December 23rd. So we would hope that, because, as I reiterated in my statements, none of our guidance for this year has, or contemplated, any revenue for Liberband on approval. So we would expect that, based on the events at the end of the year, we would get approval that we would offer guidance in the same manner that we've done in the past with a wider range.

Operator: There are no further questions. I had the time to call back over to Keith Kendall for any further remarks.

Keith Kendall: Well, thank you, everyone. It's certainly been a very exciting quarter for us. We've had a lot of hard work coming to a place that we feel good about. We're going to continue, obviously, to work with the FDA on Liver Vant as that progresses through its processes. We've got some near-term events in epinephrine that we look forward to talking about as we go through those as well, and we look forward to finishing out the year and meeting the guidance that we've given everyone. We appreciate you taking the time to talk with us today. We appreciate your questions, and we look forward to speaking with you again shortly. Thank you all and have a great day.

Operator: This is an inclusive program. You may now disconnect.

Operator: and and so on the and I'm going to be, I'm going to be, and you know, and I'm I'm Thank you, Thank you, and and Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Bhopin.

[music].

Operator: Thank you. Thank you. Thank you. Thank you.