Q2 2022 Aquestive Therapeutics Inc Earnings Call
Operator: Good morning, and welcome to the Quest for Therapeutics second quarter 2022 conference call.
Good morning, and welcome to the Quest Therapeutics second quarter 2022 conference call.
Operator: At this time, all participants are on a listen-only mode.
Daniel Barber: Right.
At this time all participants are in a listen only mode.
Operator: After the speaker's presentation, there will be a Q&A session.
Operator: To ask a question during this session, you will need to press star 1 1.
She does presentation there'll be a Q&A session to ask a question. During this session you will need your breast star one one.
Operator: As a reminder, this call will be recorded.
Operator: I would now like to introduce your host for today's conference call, Bennett Watson of ICR Westlake Investor Relations.
As a reminder, this call is being recorded.
I would now like to introduce your host for today's conference call that it Watson of ICR Investor Relations you may begin.
Bennett Watson: You may begin.
Bennett Watson: Thank you, operator.
Bennett Watson: Good morning, and welcome to today's call.
Daniel Barber: So Ram, I'll actually start backwards in your questions if that's okay.
Thank you operator, good morning, and welcome to today's call.
Bennett Watson: On today's call, I'm joined by Dan Barber, Chief Executive Officer, and Ernie Toth, Chief Financial Officer, who are going to provide an overview of recent business developments and performance for second quarter 2022, followed by a Q&A session.
Daniel Barber: From a BD perspective or business development perspective, I think that's a little early.
On today's call I'm joined by Dan Barber, Chief Executive Officer, and Ernie chose Chief Financial Officer, who are going to provide an overview of recent business developments and performance for our second quarter 2022, followed by a Q&A session. During the Q&A session. The team will be joined by Dr. Steve worked Jackie.
Bennett Watson: During the Q&A session, the team will be joined by Dr. Steve Wargacki, Vice President of R&D, and Ken Marshall, Chief Commercial Officer.
Vice President of R&D, and Ken Marshall Chief Commercial officer.
Bennett Watson: As a reminder, the company's remarks today correspond with the earnings release that was issued after market close yesterday.
As a reminder, the company's remarks today correspond with the earnings release.
Issued after market closed yesterday.
Bennett Watson: In addition, a recording of today's call will be made available on Equestiv's website within the investors section shortly following the conclusion of this call.
In addition, a recording of today's call will be made available on our quest to its website within the investors section. Shortly following the conclusion of this call.
Bennett Watson: To remind you, the Equestiv team will be discussing some non-GAAP financial measures this morning as part of its review of second quarter 2022 results.
To remind you <unk> will be discussing some non-GAAP financial measures. This morning as part of it to review our second quarter 2022 results.
Bennett Watson: The 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 Equestiv's website.
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 our questions website.
Bennett Watson: During the call, the company will be making forward-looking statements.
During the call the company will be making forward looking statements. We remind you of the Companys Safe Harbor language as outlined in Yesterdays earnings release, as well as the risks and uncertainties affecting the company as described in the risk factors section and other sections, including our annual report.
Bennett Watson: as well as with the Securities Exchange Commission on March 8, 2022, and in our quarterly reports on Form 10-Q and current reports on Form 8-K filed with the FTC.
On Form 10-K filed with the Securities Exchange Commission on March eight 2022, and in our quarterly reports on Form 10-Q, and current reports on form 8-K filed the SEC.
Bennett Watson: As with any pharmaceutical company with product candidates under development and products being commercialized,
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.
Bennett Watson: 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.
Bennett Watson: The impact of the ongoing COVID-19 pandemic is highly uncertain and cannot be predicted with certainty or clarity.
The impact of 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 of the date made.
Bennett Watson: Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as of the date made.
Bennett Watson: Actual results may differ materially from these statements.
Actual results may differ materially from these statements.
Bennett Watson: All forward-looking statements attributable to a requestive 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.
All forward looking statements attributable to a question 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.
Bennett Watson: The company assumes no obligation to update its forward-looking statement after the date of this conference call, whether as a result of new information, future events, or otherwise, except as required under applicable law.
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.
Bennett Watson: With that, I will now turn the line over to Dan.
Daniel Barber: We're right now very focused on creating value with 109 and not on outlicensing it or putting it in someone else's hands.
With that I will now turn the line over to Dan.
Daniel Barber: Thank you, Bennett.
Daniel Barber: So I don't think you'll see us do anything on that front.
Thank you Beth.
Many ways. This last quarter was the most challenging in our company's history.
Daniel Barber: In many ways, this last quarter was the most challenging in a company's history. We managed through not only a CEO transition, but a significant change in market value from the beginning to the end of the quarter. At the same time, macroeconomic conditions around us continued to deteriorate, driven by inflation, recession concerns, and global events.
Daniel Barber: So 109 clearly will be an anaphylaxis product.
We manage through not only a CEO transition.
A significant change in market value.
At the end of the quarter.
Daniel Barber: 108, I know we haven't clearly talked about all of the indications, but would be in different areas within the allergy circuit area.
At the same time macro economic conditions around us continue to deteriorate driven by inflation.
Recession concerns.
Daniel Barber: These circumstances have led us to reassess our key priorities and how we are creating value for our various stakeholders, including patients and investors.
Daniel Barber: Thank you.
Thanks.
These circumstances.
Our key priorities.
How we are creating value for our various stakeholders, including patients.
Daniel Barber: When I think about how we can help patients, I am more optimistic than I have ever been in my 15 years with the company. We have not one, but two acute rescue medications under development that have the potential to transform the patient experience within their respective therapeutic areas.
Daniel Barber: Thank you.
And investors.
When I think about how we can help patients.
More optimistic.
Ever been in my 15 years with the company.
Operator: And as a reminder, ladies and gentlemen, if you'd like to ask a question, you will need to press star 11.
We have not one but two acute rescue medications underdevelopment.
To transform the patient experience within their respective therapeutic areas.
Daniel Barber: These two medications are HUSP-109 epinephrine sublingual film for the potential treatment of severe allergic reactions, including anaphylaxis, and LibraVit diapampopril film for the potential treatment of seizure clusters.
Operator: One moment for our next question.
These two medications are <unk> eight <unk> nine epinephrine sublingual film.
Actual treatment of severe allergic reactions.
Operator: Our next question coming from the line of James Malone with Alliance Global.
Collapses and Liberty.
Buccal film.
Potential treatment of seizure clusters.
Daniel Barber: This is a great position to be in.
Yes.
Great position to be in.
Daniel Barber: When I think about the investment community, we clearly have work to do.
Operator: Your line is open.
When you think about the investment community.
Daniel Barber: The Equesta story has been overshadowed by a variety of factors, including low proprietary product sales, driven by delays in the FDA review of LibraVit, and our cash burn rate.
James Malone: Hi, good morning.
Clearly have worked.
Request. The story has been overshadowed by a variety of factors, including lower proprietary product sales driven by delays and the FDA review of litigation.
Our cash burn rate.
Daniel Barber: Over the next several months, I will be focused on reinvigorating the Equesta story and ensuring that the true value of our two major pipeline products is understood by all of our stakeholders. One of the most exciting elements of the Equesta story is the fact that, if approved and launched, both acute rescue medications have patents that extend well into the late 2030s.
James Malone: Thank you for taking my questions.
Over the next several months I will be focused on reinvigorating.
What's the story and ensuring that the true value of our two major pipeline products understood by all of our stakeholders.
James Malone: I had a quick question on the Salesforce.
One of the most exciting elements of the story.
Thanks.
Approved and launched.
Both acute rescue medications.
They extend well into the late 2013.
Daniel Barber: We must not forget the significant opportunity to create long-term value associated with these two product candidates while we manage the company's near-term changes.
We must not forget significant opportunity to create long term value associated with these two product candidates, while we manage the companys near term sheets.
Daniel Barber: Let's talk about two items that we have direct control over, proprietary product sales and our cash burn rate.
Let's talk about two items that we have direct control.
<unk> product sales and our cash burn rate.
Daniel Barber: While I will leave it to Ernie Tote, our CFO, to provide more specificity, I can tell you that we are committed to eliminating the cash burn associated with the commercial support of Simposent Oral Film for the treatment of seizures associated with Lennox-Gastaut Syndrome, or LGS.
Well I'll leave it to earnings our CFO to provide more specificity I can tell you that we are committed to eliminating the cash burn associated with the commercial support of sympathy and oil spill.
Seizures associated with Lennox <unk> syndrome or lgs.
Daniel Barber: This part of our business must be profitable on a go-forward basis.
This is part of our business must be profitable on a go forward basis.
Daniel Barber: We have eliminated almost all of the commercial burn through continued growth and right-sizing our non-sales infrastructure. As painful as this has been, right-sizing our organization was an important step forward. This means that our cash burn will be limited to our important product development efforts on AQSC 109, supported by our corporate partners.
James Malone: Can you walk a little bit through the Salesforce size, sort of the, I know you've mentioned on the right sizing, you try to avoid the front-facing Salesforce.
We have eliminated almost all of the commercial burn through continued growth in <unk>.
James Malone: Can you walk a little bit through some of the most effective channels you're finding currently?
Sizing our non sales infrastructure.
As painful as this has been right sizing our organization with an important step forward.
James Malone: And how's the overlap between the current sales, the Simplizan versus the 109, if it would come to market?
This means that our cash burn will be limited to our important product development efforts on <unk>.
Daniel Barber: We have a variety of levers that we can use to manage our cash firm. These include our ongoing U.S. and ex-U.S. licensing activities, continued reductions, in expenses, working with our lenders on a potential refinance of our debt, and conducting a basic strategic review of our assets.
James Malone: Would it be going through the same guys?
Supported by our corporate functions.
We have a variety of levers that we can use to manage our cash burn.
Our ongoing U S and ex U S licensing activities.
Continued reductions in expenses.
Working with our vendors on a potential refinancing of our debt.
A basic strategic review of our assets.
Daniel Barber: It is important that we view each asset of the business objectively and in the context, of the broader business.
James Malone: Would it need a new group of folks?
It is important.
Each of the business objectively and in the context of the broader business.
Daniel Barber: From my perspective, I continue to believe that investing in AQST 109 is a great opportunity, for a question and the right place to focus our resources, time, energy, and cash.
Daniel Barber: Sure.
From my perspective, I continue to believe that investing in <unk>.
Daniel Barber: Thanks, James.
It's a great opportunity for a question and the right place to focus our resources.
Energy Okay.
Daniel Barber: According to experts, over 40 million Americans are at risk of experiencing a severe allergic, reaction, including anaphylaxis. Yet each year, only 3 million prescriptions are filled for injectable epinephrine.
Kenneth Marshall: And Ben, could you walk through that for James?
Cash.
According to experts over 40 million Americans are at risk of experiencing severe allergic reactions, including anaphylaxis.
Kenneth Marshall: Yeah, happy to, James.
Kenneth Marshall: Our current footprint consists of 16 territories and a layer of first-line management above that.
Kenneth Marshall: In the CNS space, especially with Simplizan as an adjunctive medicine, it's a very efficient call point.
Kenneth Marshall: If you look at Libervant, there'll be slightly more physicians that use that rescue medicine.
Each year, only 3 million prescriptions are filled for injectable epinephrine.
Daniel Barber: We believe this is a major gap that needs to be addressed through patient-to-patient, education, improved risk management, and yes, additional product options.
Kenneth Marshall: So you'll probably expand it slightly.
Kenneth Marshall: But as I mentioned earlier, that 16-territory footprint covers two-thirds plus of the rescue opportunity.
We believe this is a major gap that needs to be addressed through patient patient education.
<unk> risk management.
And yes additional product options.
Daniel Barber: For the 3 million or so Americans who do fill a prescription, it is far from certain as, to whether they will carry their auto-injectors with them. I believe introducing a product that is simple, can be carried in a pocket, and delivers target, levels of epinephrine quickly would be a welcome addition for patients, caregivers, and healthcare providers. In fact, in a survey of over 500 allergists, pediatricians, and primary care physicians, we found that 88% of survey respondents were concerned about patients and or their caregivers consistently having their auto-injectors on hand at all times.
For the $3 million or so Americans to fill a prescription it is far from certain.
Whether they will carry their auto injectors.
Kenneth Marshall: Are there other pieces that you'd like me to comment on, or does that answer your question?
I believe introducing product that is simple.
Can be carried in a pocket and deliver targeted levels of epinephrine quickly.
James Malone: I think that should answer it.
James Malone: I guess, I mean, the impact of the right sizing, you know, what sort of, what sort did you get, did you cut away?
James Malone: And, and any thoughts, will that, any, any add backs again?
James Malone: Should LibraVent come, you know, get approval or, you know, 109 down the road?
Kenneth Marshall: Yeah, the cutbacks in the commercial ops, as Dan mentioned, were really the back office folks.
It would be a welcome addition for patients caregivers and health care providers.
Kenneth Marshall: We focused on preserving the customer facing team and those, and maintaining those relationships.
Kenneth Marshall: You probably would want to go a little deeper than two-thirds of the target volume out there, but as you would imagine, it's like most markets, it's concentrated, so you don't have to go from 16 to 80 to materially penetrate the rest of this market.
Kenneth Marshall: You could add, you know, single digit, maybe low double digit representatives and get closer to that 80, 80, 85% coverage.
Kenneth Marshall: And then it's just all a matter of how far down the deciles we want to chase in terms of volume when you go past that.
In a survey of over 500, Allergists pediatrician and primary care physicians, we found that 88% of survey respondents were concerned about patients and their caregivers consistently having their auto injectors on here.
James Malone: Last question, you mentioned potentially out licensing or partnering products.
Daniel Barber: Our survey data also suggests that too often, patients and caregivers use off-label drugs, such as antihistamines, as their first-line treatment for severe allergic reactions. We found that 83% of survey respondents agreed that patients with at least some risk for, anaphylaxis too often administer oral antihistamines in place of an epinephrine auto-injector, and unfortunately, many allergists will tell you, drugs such as antihistamines do not stop the allergic cascade that marks the beginning of anaphylaxis.
Yes.
Our survey data also suggests that too often patients and caregivers used off label drugs, especially anti histamines.
As their first line treatment for severe allergic reactions.
83% of survey respondents agreed or patients with at least some risk for anaphylaxis too often administer oral antihistamine.
In place of FNF.
Auto injector.
And unfortunately, many allergists will tell ya drugs, especially in Vegas.
Do not stop the allergic cascade it marks the beginning of anaphylaxis.
Daniel Barber: We are also excited by the consistently fast time to maximum concentration, or Tmax, we, have seen in studies to date. As far as we are aware, no other alternative to injected epinephrine has achieved a Tmax, that is comparable to EpiPen, the standard of care. These are just a couple of the reasons that we feel so strongly about AQSD-109.
We are also excited by the consistently fast time to maximum concentration or T. Max we have seen in studies to date.
As far as we're aware no other alternatives to injected epinephrine is achieved the T. Max that is comparable.
The standard of care.
These are just a couple of the reasons that we do.
So strongly about <unk> 109.
Daniel Barber: The results from our recent epithet study provide what we believe are compelling data, for the use of sublingual epinephrine as an acute rescue medication.
The results from our recent study provide what we believe are compelling data.
The use of sublingual epinephrine.
As an acute rescue medication.
Daniel Barber: We are currently in the clinic with our EpiFast 2 study, and we'll have direct comparative, data to EpiPen before the end of the quarter.
We are currently in the clinic.
The first two study.
I have direct comparative data for the ended the quarter.
Daniel Barber: As we have previously guided, we expect to meet with the FDA in Q4 to conduct an end-of-phase-2 meeting for this program.
As we previously guided we expect to meet with the FDA in Q4 to conduct an end of phase II meeting for this program.
Daniel Barber: Now let's talk about deliverables.
James Malone: Could you, how would you characterize the current environment for that?
Daniel Barber: All of us, especially our patient stakeholders, have waited far too long for this product to come to market.
James Malone: Is it a seller's market, a buyer's market?
Now, let's talk about.
All of us.
Especially our patient stakeholders.
Far too long for this product to come to market.
Daniel Barber: Sometimes, because of delays like the one we are experiencing, our stakeholders can forget why this drug is so important to the patient population.
Sometimes because of delays like the one we are experiencing.
Our stakeholders can forget why this drug is so important.
Daniel Barber: Imagine being a patient who is at risk for seizure clusters. Every part of your daily life must be viewed through the lens of a potential seizure.
James Malone: Has there been, what's the level of interest that you could be able to characterize for outsiders like us looking in?
<unk> population.
Imagine being a patient with at risk for seizure clusters.
Daniel Barber: Sure, James.
Daniel Barber: So, first I would just say at a global level, with the CEO transition, it's normal to obviously take a look at everything, the pieces and parts and priorities and how we think about those things.
Daniel Barber: So that work is still going on in its early days.
Daniel Barber: I think obviously in Q1 and early Q2, with how the market's performed, people seem to be nervous.
Part of your daily life.
Daniel Barber: But the environment that I see right now and we're experiencing is much more positive.
Viewed through the lens of potential seizure.
Daniel Barber: Where will you be when it happens?
Operator: I'm showing no further questions at this time.
Daniel Barber: I would now like to turn the call back over to Dan Barber for any closing remarks.
Daniel Barber: Will you have your medication with you?
Daniel Barber: Thank you, Livia.
Where will you be when it happens.
Daniel Barber: Will you be able to use your medication?
When you had your medication with you.
Daniel Barber: Will those around you be able to correctly administer your medication?
Will you be able to use your medication.
Well those are around you would be able to correctly administer your medication.
Daniel Barber: Will it work after single administration and under all conditions?
After a single administration and under all conditions and.
Daniel Barber: And, will you have to worry that more seizures might occur within hours of your first dosing?
You have to worry more seizures might occur within hours of your first dosing.
Daniel Barber: Liverman was built to fit the lives and activities of the patient.
Liberty was built to fit the lives and activities of the patient.
Daniel Barber: As one caregiver of an LGS patient who currently uses Simposyn recently wrote to the FDA, the fact that Simposyn is so easy to administer and that it dissolves quickly gives us the peace of mind that the medication is most effective. We are also able to carry Simposyn effortlessly because of its portability.
As one caregiver lgs patients currently use a simpler than recently wrote to the FDA.
That said it is so easy to administer.
<unk> quickly gives us the peace of mind that the medication is most effective.
We are also able to carry citizens effortlessly because its portability.
Daniel Barber: My husband and I always carry an extra dose in our wallets.
It has been and I always carry an extra dose and our wallets.
Daniel Barber: Based on our experience with Simposyn, we are writing to advocate for the approval of Liverman. It would be a huge contribution to the epilepsy community to have a rescue medicine with the portability, ease of use, and precision that we have experienced with Simposyn."
Based on our experience with dividend.
Trying to advocate for the approval of a liberman.
It would be a huge contribution to the epilepsy.
I have a rescue medicine portability ease of use and precision that we would experience with vimizim.
Daniel Barber: From my perspective, the most credible voices come from those who have had to live with and manage the potential onset of seizure clusters.
Yeah.
From my perspective.
Credible voices coming from those who have had to live with and manage the potential onset seizure clusters.
Daniel Barber: We believe our final label for Liverman and our publishable clinical results will provide patients with many compelling answers to the questions I mentioned before.
We believe our final label for Libertad.
<unk> clinical results will provide patients with many compelling answers the questions I had mentioned before.
Daniel Barber: We are anxious to bring this offering to the patient population, and we will continue to work with the FDA to reach a final decision on our application.
We are anxious to bring these offerings in the patient population and we will continue to work with the FDA to reach a final decision on our application.
Daniel Barber: While we can appreciate that the FDA has faced unprecedented challenges over the last several years between the pandemic and continuous orphan drug litigation, we remain disappointed that the FDA did not meet its commitment on our fiducity.
While we can appreciate that.
Yes.
Precedented challenges over the last several years between the pandemic and continuous orphan drug litigation.
Main disappointed that the FDA.
Did not meet its commitments.
Daniel Barber: Despite the challenges that Liverman has faced, each day that goes by brings us closer to both an FDA decision and the expiration of any exclusivity hurdles facing Liverman.
To date.
Despite the challenges the preventive space each day that goes by brings us closer.
FDA decision.
Exploration of any exclusivity hurdles facing liberman.
Daniel Barber: From my perspective, the patient need for additional medical options in this space remains great, and if approved, we will be focused on getting patients access to Liverman as rapidly as possible.
From my perspective.
<unk> need for additional medical options in this space remains great.
And if approved.
We will be focused on getting patient access to liberman.
Rapidly as possible.
Daniel Barber: It would be unrealistic to think that we can solve all of the problems facing a cluster immediately. However, However, we are laser-focused on continuing to carefully manage the elements of the business we control while rapidly progressing our pipeline programs toward significant value inflection milestones.
It would be unrealistic to think that we can sell all of the problems facing requested immediately however, we are laser focused.
Moving to carefully manage the elements of the business meet control, while rapidly progressing our pipeline programs towards significant value inflection milestones.
Daniel Barber: We can also make sure that the Equestria story is one that is clear, transparent, and unobscured by unnecessary noise.
We can also make sure that the quest. The story is one that is clear transparent and on.
Unsecured unnecessary noise.
Daniel Barber: Sometimes, the simplest stories can be the most compelling. For you, a pharmaceutical company with existing revenue and two acute rescue medications under development that both have strong clinical results to date, as well as long patent lives, is a simple and compelling story.
Sometimes simpler stories can be the most compelling.
In my view.
Pharmaceutical company existing revenue.
Two acute rescue medications underdevelopment, both have strong clinical results to date as well as long patent lives.
And compelling story.
Daniel Barber: In summary, we anticipate that our revenue-generating divisions will be profitable going forward. We have reduced our expenses and are carefully managing our cash flow through our available levers.
In summary.
Anticipating that are revenue generating divisions will be profitable going forward.
We have reduced our expenses and are carefully managing our cash flow through our available levers.
Daniel Barber: We have two exciting acute rescue medications under development, both with potential to transform the patient experience.
We had two exciting acute rescue medications under development, both with potential to transform the patient experience.
Daniel Barber: We are focused on reinforcing the Equestria story with our various stakeholders while we execute on our strategy.
We are focused on reinforcing the question story their various stakeholders, while we execute on our strategy.
Daniel Barber: With that, I will ask Ernie to walk you through the most recent financial results.
With that I will ask earnings walk you through the most recent financial results.
Ernie Toth: Thank you, Dan, and good morning, everyone.
Daniel Barber: Thank you for everyone for joining today's conference call.
Thank you Dan and good morning, everyone.
Ernie Toth: By now, you have seen our financial results in our 10-Q and earnings release that were filed last evening.
Daniel Barber: I would just leave you with a reminder of where our focus will be.
Right now you've seen our financial results and our 10-Q and earnings release that were filed last evening.
Ernie Toth: As we typically do, we will address most of the discussion related to the second quarter 2022 results in the Q&A. During the second quarter, we continued to manage the company for success as we raised additional capital and reduced expenses going forward to extend our cash runway. On June 8th, we closed on a registered direct offering with a single healthcare-focused institutional investor and certain of the company's executives generating net proceeds of approximately $7.8 million after deducting fees and expenses.
As we typically do we will address most of the discussion related to the second quarter 2022 results into Q&A.
During the second quarter, we continued to manage the company for success as we raise additional capital and reduced expenses.
Forward to extend our cash runway.
Hi, Judy.
Closed on a registered direct offering.
Healthcare focused institutional investor and certain other company executives generating net proceeds of approximately $7 8 million after deducting fees and expenses.
Ernie Toth: We intend to use these net proceeds from the offering for general corporate purposes. On April 12th, we entered into a purchase agreement with Lincoln Park Capital Fund, which provides that upon the terms and subject to the conditions and limitations under the purchase agreement, the company has the right, but not the obligation, to sell to Lincoln Park up to $40 million of its common stock from time to time over the 36-month term of the purchase agreement.
We intend to use these net proceeds from the offering for general corporate purposes.
On April 12, we entered into a purchase agreement with Lincoln Park Capital Fund.
Which provides that upon the turf and subject to the condition and limitations under the purchase agreement.
He has the right, but not the obligation to sell to Lincoln Park up to $40 million of its common stock from time to time over the 36 month term of the purchases are great.
Ernie Toth: The Lincoln Park facility, along with our existing ATM facility, should we decide to utilize them, are available tools requested.
The Lincoln Park facility, along with our existing ATM facility should we decide to utilize them our.
Ernie Toth: However, we will always look first at options that are non-dilutive and available to us to extend our cash runway.
Our available tools request however.
However, we will always look at options that are on a diluted and available to us to extend our cash runway.
Ernie Toth: During the second quarter, we implemented expense reductions to reduce the cash burn of our commercial operations and right-size the company while preserving the continued development of AQSP 109.
Daniel Barber: We are focused on progressing 109 rapidly.
Daniel Barber: We're focused on interacting with the FBA to ensure we get Liberman to the market as soon as possible.
Daniel Barber: At the same time, we will continue to be very diligent on our cash management and making sure we tell the Questive story to you and our other stakeholders as clear and transparent as we can.
During the second quarter.
Amendment expense reductions to reduce the cash burn our commercial operations and right size the company, while preserving the continued development of <unk> 109.
Ernie Toth: These expense reductions contributed to our improved 2022 EBITDA guidance, which I will discuss later.
These expense reductions contributed to our improved 2022, EBITDA guidance, which I will discuss later.
Ernie Toth: Our strong, ongoing commercial and manufacturing supply businesses, our already implemented expense management, and business development activities, as well as the additional funds available under our existing debt facility, should LIVERBAND be approved and gain market access, provide the tools and flexibility as we fund our ongoing business activities.
Our strong ongoing commercial and manufacturing and supply.
Our already implemented expense management and business development activities as well as the additional funds available under our existing debt facility should deliver.
Fruit and gain market access provides the tools and flexibility as we fund our ongoing business activity.
Ernie Toth: Total revenues were $13.3 million in the second quarter of 2022, compared to $15.3 million in the second quarter of 2021. Excluding a one-time milestone earned from CHEMFARM of $2 million that was recognized in the second quarter of 2021, total revenue remained flat. Total revenues were $25.5 million for the six months ended June 30, 2022, compared to $26.5 million for the six months ended June 30, 2021. Excluding the CHEMFARM milestone of $2 million, as well as the deferred revenue of $2.1 million from the terminated license and supply agreement with Fortovia Therapeutics that was recognized in the first quarter of 2021, but did not reoccur in 2022, total revenue increased by $3.2 million, or 14%. This increase was primarily driven by increases in proprietary product sales of 29%, as well as manufacturer and supply revenue of 11%.
Total revenues were $13 3 million in.
In the second quarter of 2022 compared to $15 3 million.
In the second quarter of 2021.
Excluding a one time milestone earned from Kevin Farr up $2 million that was recognized in the second quarter of 2021 total revenue remained flat.
Total revenues were $25 $5 million for the six months ended June 32022, compared to $26 5 million.
For the six months ended June 30 of 2021.
Excluding the farmer milestone of $2 million.
As well as the deferred revenue of $2 $1 million from the terminated license and supply agreement with <unk> Therapeutics that was recognized in the first quarter of 2021, but did not re occur in 2022 total revenue increased by $3 2 million or <unk>.
14%.
This increase was primarily driven by increases in proprietary product sales of 29% as well as manufacturer and supply revenue of 11%.
Ernie Toth: Our net loss for the second quarter of 2022 was $16.3 million, or $0.36 loss per share. The net loss for the second quarter of 2021 was $12.4 million, or $0.33 loss per share. The year-over-change in net loss was driven by lower revenue, as mentioned earlier, and higher costs and expenses, including severance costs of $2.3 million in the second quarter of 2022.
Our net loss for the second quarter of 2022 was $16 3 million or.
Or <unk> 36 loss per share.
The net loss for the second quarter of 2021 was $12 4 million or <unk> 33 loss per share.
Your change in net loss was driven by lower revenue as mentioned earlier.
Higher cost and expense.
Putting severance costs of $2 $3 million in the second quarter of 2022.
Ernie Toth: This was offset by a decrease in interest expense and a decrease in non-cash interest expense related to the Kymobi monetization transaction.
This was offset by decreased interest expense and a decrease in noncash interest expense related to the <unk> monetization transaction.
Ernie Toth: Our net loss for the six-month end of June 30, 2022 was $29.5 million, or $0.68 loss per share.
Our net loss for the six months ended June 32022 was $29 5 million.
Or <unk> 68 loss per share.
The net loss for the six months ended June 32021 was $27 million or <unk> 74 loss per share.
non-GAAP adjusted EBITDA loss was $9 9 million for the second quarter of 2022 compared to a loss of $4 1 million in.
In the second quarter of 2021.
Year over year change in adjusted EBITDA was driven by higher net loss, including severance costs.
non-GAAP adjusted EBITDA loss was $18 million for the six months ended June 32022, compared to a loss of $10 3 billion.
For the six months ended June 32021.
Yeah.
Cash and cash equivalents were $17 7 million.
As of June 30 of 2022.
Ernie Toth: The net loss for the six-month end of June 30, 2021 was $27 million, or $0.74 loss per share.
Ernie Toth: Non-GAAP adjusted EBITDA loss was $9.9 million for the second quarter of 2022 compared to a loss of $4.1 million in the second quarter of 2021. The year-over-year change in adjusted EBITDA was driven by higher net loss, including severance costs.
Ernie Toth: Non-GAAP adjusted EBITDA loss was $18 million for the six-month end of June 30, 2022 compared to a loss of $10.3 million for the six-month end of June 30, 2021.
Ernie Toth: Cash and cash equivalents for $17.7 million as of June 30, 2022.
As outlined in the press release issued last night after market close we are revising our full year 2022 financial outlook.
Ernie Toth: As outlined in the press release issued last night after market close, we are revising our full year 2022 financial outlook. Our updated financial year expectations are total revenues of approximately $46 million to $49 million, increased from $42 million to $47 million in prior guidance, non-GAAP adjusted gross margin of approximately 70% to 75%, and non-GAAP adjusted EBITDA loss of approximately $37 million to $43 million, improved from $51 million to $58 million in prior guidance. It is worth reiterating that this 2022 financial guide does not include any revenues from Liberman, and will not until we receive FDA approval of Liberman for the U.S. market access and the launch is underway.
Our updated financial year expectations are.
Total revenues of approximately $46 million of $49 million increase from $42 million of $47 million.
Prior guidance.
non-GAAP adjusted gross margin of approximately 70% 75%.
And non-GAAP adjusted EBITDA loss of approximately $37 million to $43 million.
Improved from $51 million to $58 million and prior guidance.
It is worth reiterating that this 2022 financial guidance does not include any revenues from government.
Until we receive FDA approval of <unk> or the U S market access and the launch is underway.
Ernie Toth: In summary, our 2022 guidance for full year non-GAAP adjusted EBITDA loss reflects continued strong performance, by both our commercial operations and manufacturing and supply operations, and continued focused R&D investments related to the advancement of AQST 109.
In summary, our 2022 guidance for full year non-GAAP adjusted EBITDA loss reflects continued strong performance by both our commercial operations and manufacturing and supply operations.
And continued focused R&D investments related to the advancement of <unk> do you want to know.
Ernie Toth: At the same time, our implemented expense management across our business will allow us to be as capital efficient as possible.
At the same time, our implemented expense management across our business will allow us to be as capital efficient as possible.
Operator: With that, I will now turn the line back to the operator to open the line for questions.
Daniel Barber: With that, Operator, we will now conclude today's call.
With that I will now turn the mic back to the operator to open the line for questions.
Operator: Thank you, and as a reminder, ladies and gentlemen, if you'd like to ask a question, you will need to press star 1-1.
Operator: Ladies and gentlemen, that does conclude our conference for today.
Thank you and as a reminder, ladies and gentlemen, good luck to ask a question you will need to press star one one.
Operator: Please stand by while we compile the Q&A roster.
Operator: Thank you for your participation.
Please standby, while we compile the Q&A roster.
Operator: Now, first question coming from the line of Gary Nachman with BMO Securities.
Operator: You may now disconnect.
No first question coming from the line of Gary Nachman with BMO Securities. Your line is open.
Operator: Your line is open.
Hi, This is evan on for Gary Nachman.
Thanks for taking our questions.
For let it prevent.
Any more visibility on that timeline and if you can add any additional color regarding the discussions with the different groups the FDA.
Including the orphan drug group and I have a few follow.
Thanks.
Evan Hwa: Hi, this is Evan Hwa.
Sure good.
Evan Hwa: I'm for Gary Nachman.
Morning, guys and nice to hear your voice.
Evan Hwa: Thanks for taking our questions.
So look we're all frustrated with the delay at the FDA and liver been but I think it is important to remember first our patents on this program go well into the 2013, we know the unmet need remains high we're the only oral product that is under review at the FDA for this space.
Evan Hwa: For Liberman, is there any more visibility on that timeline?
Evan Hwa: And if you can add any additional color regarding the discussions with the different groups at FDA, including the orphan drug group?
Evan Hwa: And I have a few follow-ups after that.
Daniel Barber: Thanks.
So from our perspective, while we're frustrated at an eight months delay we have to remember a tremendous potential value associated with this program as we go through the years to come.
When it comes to the FDA at this point, we're having what I would describe it as just about weekly interaction my last interaction with the FDA was in the last two weeks and it was with the head of the orphan drug group.
I can tell you they are acknowledging our patients.
<unk> indicated that they are making progress and they reiterated that.
Dave will get a response in a reasonable timeframe.
Do believe I do believe they're working I do believe they are making progress and as you expect we will get an answer.
Daniel Barber: Sure.
In the future so.
With that I would I mean.
What other questions we can answer for you.
Daniel Barber: Good morning, Evan.
Daniel Barber: Nice to hear your voice.
Great.
And then for <unk> 109.
What are you planning for in terms of the pivotal PK, especially with the final formulation size.
Dose and secondly, what the study would be sufficient for filing.
Yes, so to be clear, we're already using the final formulation and dose. The <unk> study that we just completed and all three parts of that study we used the dose and the strength that we will be using in our pivotal PK study.
Daniel Barber: So, look, we're all frustrated with the delay at the FDA and Liberman, but I think it is important to remember, first, our patents on this program go well into the 2030s.
In terms of the design I will pass it over to my colleague Steve to give you a brief overview of that.
Daniel Barber: We know the unmet need remains high.
Thank you.
So we continue to prepare for the pivotal study.
Daniel Barber: We're the only oral product that is under review at the FDA for this disease phase.
However.
We are approaching our end of phase.
Phase II meeting.
Q4 of this year, where we will get it you take full alignment with the FDA on all of the critical statistical endpoints.
That we need to.
We have a successful pivotal study.
And was there a last part of your question is we cover your question.
Yes, the last part.
The study is going to be sufficient for filing or would you need another study.
Daniel Barber: And so from our perspective, while we're frustrated at an eight-month delay, we have to remember the tremendous potential value associated with this program as we go through the years to come.
Daniel Barber: My last interaction with the FDA was in the last two weeks, and it was with the head of the Orphan Drug Group.
Yes, well as Steve mentioned, the end of Phase II meeting, we do see as a critical milestone for this program, whereas you know in that meeting we will lay out with the FDA are remaining work to finally and make sure that they are aligned with our view right now the two studies that we're planning.
Daniel Barber: I can tell you they are acknowledging our patients.
Daniel Barber: They've indicated that they are making progress, and they've reiterated that they will get a response in a reasonable timeframe.
Daniel Barber: I do believe them.
Prior to filing would be the pivotal PK study that Steve just mentioned as well as a small pediatric study in healthy volunteers other than that we will do a human factor study that is already ongoing.
We don't plan at this point on doing any additional studies prior to filing.
Daniel Barber: I do believe they're working on it.
Great. Thanks for taking my questions.
Daniel Barber: I do believe they're making progress, and I do expect we will get an answer in the future.
Yes.
Thank you and our next question coming from the line of Jason Butler with JMP Securities. Your line is open.
Daniel Barber: So, with that, I'm going to ask what other questions we can answer for you today.
Hi, Thanks for taking the questions I just had a couple about <unk>.
The most recent data you you announce firm SaaS one study.
The arm, where you looked at the swallowing data.
I guess can you talk about the Tolerability profile that you saw in that arm and then.
Just from the.
The fact that you saw it actually pretty meaningful.
Absorption and good PK there how are you thinking about using this information.
And the pivotal planning and what if any regulatory implications that might have.
Evan Hwa: Great.
Yes, good morning, Jason So when we think about the <unk> study I think it's important to remember this was a six month study a lot a big body of work there were three parts to it with multiple arms in each part and as you talked about in this latest or last part we included care.
Evan Hwa: And then for AQST-109, what are you planning for in terms of the pivotal PK, especially with the final formulation size and dose?
<unk> work, where we've looked at the performance of our products when.
Subject doesn't follow the instructions for use appropriately and also after having.
Something in this case, a peanut butter sandwich.
Evan Hwa: And secondly, would the study be sufficient for filing?
As you noted we were surprised by the robustness and under all conditions of our results and we do believe that the profile.
And when I say profile.
Co kinetic results as well as the PD results are all favorable.
Two.
To our application and what will put forward to the FDA. So we're very happy and pleased with what we saw in that characterization work in terms of the Tolerability profile, we have no serious aes in our study.
Evan Hwa: Yes.
When we look at the AE profile.
Is aligned with the what's known with the Epipen and other injectable products that are in the market.
Okay, Great I appreciate it thanks for taking my question.
Thank you and our next question.
And our next question coming from the line of Thomas Flaten with Lake Street Capital. Your line is open.
Daniel Barber: So, to be clear, we're already using the final formulation and dose. The EPIFAST study that we just completed, in all three parts of that study, we used the dose and the strength that we will be using in our pivotal PK study.
Yes. Good morning, Thanks for taking the questions I was wondering if you could provide some additional color on some of the right sizing that you've done in the commercial organization, particularly with respect to field force.
Sure Good morning Thomas.
No.
From a right sizing perspective.
<unk>.
We took action across the organization so across functions, we did not just right size within the commercial group, but specifically on the commercial side.
The focus was on the non sales bearing part of the organization. So we have worked hard to maintain the footprint that we have.
You see we grew our simply been scripts again this last quarter and we continue to grow our scripts each quarter I think it is critical with that important asset that we worked towards being cash flow positive and that is where it is focus of that group will remain as we go forward.
And then with respect to deliver van.
When and if a decision comes from FDA, what will there be any heads up on your part I know, we don't have a <unk> date out there. So you don't really have anything to aim for him I was thinking about field force expansion and how are you going to support that commercially.
Will all of the all of those decisions. We made post decision since you don't have a heads up on how you're thinking about that sequencing.
Right.
So we will have to.
Would expect there would be some back and forth with the FDA prior to.
Receiving a decision.
That's a matter of a couple of days or a week it really depends on how they reach out to us but in terms of launching liver event, we remain ready to launch liver.
Immediately upon approval and.
I'll pass it over to my colleague Ken in a second but what I would say is we are focused on launching liver event with in our means is the way I would put it.
We will not see us hire 40 reps the next day or bring on a large new portion of that to the company. We will launch within it means that we have and we think we can do that very efficiently.
Kevin if you could just elaborate a little bit on the launch plans for Liberty.
Stephen Wargacki: In terms of the design, I'll pass it over to my colleague Steve to give you a brief overview of that.
Sure happy to Dan.
Morning Thomas.
Probably the key step here is his stock in the trade that usually takes about 30 days. So there would be a little bit of room in that period.
To train and maybe expand targets for our current footprint.
Stephen Wargacki: Thank you, Dan.
The current footprint that Dan alluded to covers nearly two thirds of the rescue opportunity as you imagine it's pretty concentrated.
And <unk> put us in the right place to get to know these folks and so I think were set.
For very rapid launch, even if we didn't get much notice from the FDA.
Got it and then just one final one for me as part of these cost cutting measures I know, we haven't talked about anything else in the pipeline beside 109 is it fair to assume that most of the things that you might have had in the pipeline are on hold at this point on until <unk>.
And 109 makes it would make some forward progress.
I think on hold might be too too strong.
<unk>.
<unk> hundred eight in particular, we do continue to see a place in our pipeline for that program and we remain excited about the profile that Steve and his team have created with that product I.
I would describe the work that we're doing on that as well.
CMC focused work at this point, so I don't want to stay on hold what I would say is we will concentrate our resources as I said earlier in this call on 109 to make sure that we have progress on that program as rapidly as possible.
Great I appreciate you guys, taking my questions. Thank you.
Thank you and Mylan for next question.
Stephen Wargacki: Yes.
And our next question coming from the line of <unk> <unk> from Wedbush. Your line is open.
Hi, good morning, Thanks for taking our question could you just elaborate a little bit more on the planes.
Plans for non dilutive cash to extend the cash runway and then thinking about Liberty Matt how.
How are these kind of larger political dynamics at play.
The catalyst farm decision fairness, and orphan drug act et cetera.
Are these impacting the.
PD decision on OLED for Liberty.
Stephen Wargacki: So, we continue to prepare for the pivotal study.
Stephen Wargacki: However, we are approaching our end of Phase II meeting in Q4 of this year, where we'll seek full alignment with the FDA on all the critical statistical endpoints that we need to have a successful pivotal study.
Sure.
Andreas.
A non dilutive cash perspective, as Ernie laid out in his comments, we do have multiple levers that we're very focused on right. Now one is expense management and you heard us talk about the <unk>.
Evan Hwa: Evan, was there a last part to your question, or did we cover your question?
Evan Hwa: Yes, last part.
Right sizing, we did and we will continue to make sure that we are very.
<unk> focused on maintaining.
Lean expense structure.
We also we do have a variety of levers when it comes to the assets we have in our company so out licensing.
Some of the assets, we have whether it be ex U S or even within the U S is something that we will continue to look at.
And the final piece, which does also tightened expenses, but also ties the topline is focusing on profitability. We had two parts of our business that are cash generating with our commercial sales and our manufacturing sales and in both places we will continue to make sure that we operate as efficiently as possible.
To maximize the cash that comes out of those components.
I think the second part of your question Andreas was on the political environment and I think you're referring to that the rare act in a disciplined reauthorization bill going through Congress, we like everyone are watching that carefully.
When and how that bill gets passed.
I would say, it's a little early to tell.
The FDA will be impacted by that reauthorization Bill we're hopeful like everyone else in this industry that.
<unk> doesn't have to.
Do any any layoffs within this organization in terms of orphan drug specifically, we do believe the FDA is wisely trying to fix some of the problems that have occurred in the orphan drug.
Space and we're supportive of their efforts are and we're hopeful for them.
That legislation may 13th.
Yeah.
Great. Thank you.
Thank you and most of our next question.
And our next question coming from the line of Ransom <unk> with HC Wainwright. Your line is open.
Thanks, so much for taking my questions. Firstly with respect to <unk> can you talk a little bit about how gross to nets have been evolving lately and where you expect that direction to go over the course of the coming months and quarters.
Sure Good morning, Robyn I'll hand, it over.
Kevin I, just want to reiterate that we.
We continue to grow.
Every quarter and the.
Asset is valuable to the organization and we want to make sure.
<unk> continues to expand and that patients continue to have access to it Ken could you walk through.
Your growth strategy a little bit.
And Ron was the question growth strategy, our gross to net I'm sorry, it broke up a little bit of gross to net gross to net I thought it was gross to net.
I'll give you some high level information and then Ernie if you want to.
Be more specific.
I'll.
Jump in.
When you look at our gross to net it's fairly fairly predictable. If you look at our history and then anticipate some level of price increase about half of our business.
As Medicaid.
Medicare and so you're given youre going to give some of that back with the CPI penalty now having said that with inflation will probably get a little bit of a break so.
Generally you might expect a point or two gain year over year would be not a bad estimate.
Okay.
That's helpful. Secondly, I wanted to ask about 109 relative to $1 <unk>.
And how are you folks are thinking about this from a strategic as well as a clinical development perspective.
Should we look at 109 and 108 as being directly complementary things that can be commercialized using exactly the same infrastructure or how distinct are that you're really and from a business development perspective, as you look to optimize the value of these assets.
Looking at treating them as a package deal or would you look to potentially for example, execute something from a business development perspective on 108 independent Taiwan.
Alright.
So Rob I'll actually start backwards on your questions. If that's okay.
From a BD perspective development perspective, I think it's a little early.
Were right now very focused on creating value.
With one nine and.
Now on out licensing it or putting it in someone else's hands.
I don't think Youll see us do anything on that front.
Terms of infrastructure I think its very plausible that 109 and $1 eight are complementary to each other we view our epinephrine prodrug work as a platform and that platform. While it can be useful outside of the allergy space has multiple applications that can be in there.
Allergy space and so I think it.
It's well within our strategic thoughts to see them as aligned with each other.
In terms of how to.
Compare the two against each other.
We do see them as while they are complementary they would be targeting very different indications.
109, clearly will be an anaphylaxis products, one way I know, we haven't clearly talked about all of the indications, but would be in different areas within the allergy.
<unk> therapeutic area.
Thank you.
Thank you and as a reminder, ladies and gentlemen.
You will need to press star one one.
Okay.
Our next question.
Okay.
Sure.
Our next question coming from the line of James Molloy with Alliance Global Your line is open.
Hi, Good morning. Thank you for taking my questions Hey, a quick question on the on the sales force could you walk a little bit through the Salesforce size sort of the I know you had mentioned that on the right size and you try to avoid the front facing sales force can you talk a little bit through some of the most effective channels you are finding currently.
How is the overlap between the.
The current sales in <unk> versus <unk>.
The 109 coming to market would've gone through the same guys that need a group of folks.
Thanks James.
And could you walk through that for James Yes, happy to you James.
Our current footprint footprint consists of 16 territories and.
In a layer of first line management above that in the CNS space.
Specialty was simply then as an adjunctive medicine, it's a very efficient call point when people get on.
A second and a third medicine, there is certainly being seen by an <unk> or an epilepsy specialists.
And you would count those in the numbers of thousands. So 16 territory footprint is is not a bad size. If you look at labor band.
There'll be slightly more physicians that use that rescue medicine, so youll probably expanded slightly.
As I mentioned earlier that 16 territory footprint covers two thirds plus.
The rescue opportunity.
Are there other pieces that you'd like me to comment on or or does that answer your question.
I think that you can.
Answered I guess.
I mean is the impact of the right sizing.
What sort of what sort of as you kind of weigh in.
Uh huh.
Any thoughts without any any add backs again should live event.
Get approval or 109 down the road.
Yes, the cutbacks in the commercial ops as Dan mentioned, we're really the back office folks.
We are focused on preserving the customer facing team and those in maintaining those relationships.
You probably would want to go a little deeper than two thirds of the target.
Volume out there, but as you would imagine it's like most markets. It's concentrated so you don't have to go from 16 to 82 materially penetrate the rest of this market.
You could add.
Single digit maybe low double digit representatives and get closer to that 80, 885% coverage and then it's just all a matter of how far down the desktops, we want to chase in terms of volume when you get pass that.
Great and then last question, you mentioned potentially out licensing or partnering.
<unk>.
Would you characterize the current environment for that is it a sellers market a buyer's market hasnt been.
What's the level of interest that you could you would be able to characterize or outside of that I was looking at.
Sure James So.
First I would just say at a global level.
The CEO transition, it's normal to obviously take a look at everything that Houston parts and priorities and how we think about those things that work is still going on and it's early days. So I don't think we have a specific view on.
<unk>.
What exactly the pieces and parts would be that we are.
We're working on right now, but what I would.
Give you is my interactions with how the market is in terms of licensing opportunities I think it's still robust I think.
Obviously in Q1 and early Q2.
How the markets performed people seem to be nervous but the.
The environment that I see right now and we're experiencing is it's much more positive.
Okay.
Excellent. Thank you for taking the questions.
Evan Hwa: Is the study going to be sufficient for filing, or would you need another study?
I'm showing no further questions at this time I would now like to turn the call back over to Dan Barber for any closing remarks.
Daniel Barber: Yes.
Daniel Barber: Well, as Steve mentioned, the end of Phase II meeting we do see as a critical milestone for this program, whereas you know in that meeting we'll lay out with the FDA our remaining work to filing and make sure that they are aligned with our view.
Daniel Barber: Right now, the two studies that we are planning prior to filing would be the pivotal PK study that Steve just mentioned, as well as a small pediatric study in healthy volunteers.
Thank you Lydia. Thank you for everyone for joining today's conference call I would just leave you with a reminder of where our focus will be we are focused on progressing one of nine rapidly.
Daniel Barber: Other than that, we will do a human factor study that's already ongoing, and we don't plan at this point on doing any additional studies prior to filing.
Evan Hwa: Great.
Evan Hwa: Thanks for taking my questions.
Operator: Thank you.
Operator: And our next question coming from the line-up, Jason Butler with JMP Securities.
Operator: Your line is open.
Jason Butler: Hi.
Jason Butler: Thanks for taking the questions.
Jason Butler: I just had a couple about the most recent data you announced for the FAST-1 study.
Jason Butler: For the arm where you looked at the swallowing data, I guess can you talk about the tolerability profile that you saw in that arm?
Andreas Argyrides: Could you just elaborate a little bit more on the plans for non-dilutive cash to extend the cash runway?
Jason Butler: And then just from the fact that you saw actually pretty meaningful absorption and good PK there, how are you thinking about using this information in the pivotal planning and what, if any, regulatory implications it might have?
Andreas Argyrides: And then thinking about Libravant, how are these kind of larger political dynamics at play?
Jason Butler: Thanks.
Andreas Argyrides: You know, the Catalyst Farm decision, Fairness and Norfin Drug Act, et cetera.
Daniel Barber: Yeah, good morning, Jason.
Andreas Argyrides: How are these impacting the OPD decision on ODD for Libravant?
We're focused on interacting with the FDA to ensure we get delivered to the market as soon as possible at the same time, we will be very continue to be very diligent on our cash management and making sure. We tell the request the story to you and our other stakeholders.
Daniel Barber: So, when we think about the Epifast study, I think it's important to remember this was a six-month study, so a big body of work.
Daniel Barber: Thanks.
Daniel Barber: There were three parts to it with multiple arms in each part.
Daniel Barber: Sure.
Daniel Barber: And as you talked about in this latest or last part, we included characterization work where we looked at the performance of our product when a subject doesn't follow the instructions for use appropriately, and also after having eaten something, in this case, a peanut butter sandwich.
Daniel Barber: Good morning, Andreas.
Daniel Barber: As you noted, we were surprised by the robustness under all conditions of our results, and we do believe that the profile, and when I say profile, I mean the pharmacokinetic results as well as the PD results, are all favorable to our application and what we'll put forward to the FDA.
Daniel Barber: From a non-dilutive cash perspective, as Ernie laid out in his comments, we do have multiple levers that we're very focused on right now. One is expense management.
Daniel Barber: Okay, so we're very happy and pleased with what we saw in that characterization work.
Daniel Barber: And you heard us talk about the right sizing we did.
Daniel Barber: In terms of the tolerability profile, we have no serious AEs in our study, and when we look at the AE profile, it is aligned with what's known with the EpiPen and other injectable products that are in the market.
Daniel Barber: And we'll continue to make sure that we are very focused on maintaining a lean expense structure.
Jason Butler: Okay, great.
Daniel Barber: We also we do have a variety of levers when it comes to the assets we have in our company.
Jason Butler: Appreciate it.
Daniel Barber: And the final piece, which does also tie to expenses, but also ties to the top line, is focusing on profitability.
Jason Butler: Thanks for taking the question.
Daniel Barber: We have two parts of our business that are cash generating with our commercial sales and our manufacturing sales.
Operator: Thank you.
Daniel Barber: And in both places, we will continue to make sure that we operate as efficiently as possible to maximize the cash that comes out of those components.
Operator: One moment for our next question.
Daniel Barber: I think the second part of your question, Andreas, was on the political environment.
Operator: And our next question coming from the lineup, Thomas Blanton with Lake Street Capital.
Daniel Barber: And I think you were referring to the RARE Act and the PDIPA reauthorization bill going through Congress.
Operator: Your line is open.
Daniel Barber: We, like everyone, are watching that carefully.
Thomas Blanton: Yeah, good morning.
Daniel Barber: There's implications for the entire industry on when and how that bill gets passed.
Thomas Blanton: Thanks for taking the question.
Daniel Barber: I would say it's a little early to tell if the FDA will be impacted by that reauthorization bill.
As clear and transparent as we can.
Thomas Blanton: I was wondering if you could provide some additional color on some of the right-sizing that you've done in the commercial organization, particularly with respect to Field Force.
Daniel Barber: We're hopeful, like everyone else in this industry, that Caleb doesn't have to do any layoffs within his organization.
Daniel Barber: Sure.
Daniel Barber: In terms of orphan drug specifically, we do believe the FDA is wisely trying to fix some of the problems that have occurred in the orphan drug space. And we're supportive of what their efforts are.
Daniel Barber: Good morning, Thomas.
Andreas Argyrides: And we're hopeful for them that the legislation meets their needs.
Daniel Barber: So from a right-sizing perspective, we took action across the organization, so across functions.
Andreas Argyrides: Great.
With that operator, we.
Daniel Barber: We did not just right-size within the commercial group, but specifically on the commercial side, the focus was on the non-sales bearing part of the organization.
Andreas Argyrides: Thank you.
Thomas Blanton: And with respect to LibraVan, when and if a decision comes from FDA, will there be any heads-up on your part?
Andreas Argyrides: Thank you.
Raghuram Selvaraju: Should we look at 109 and 108 as being directly complementary things that can be commercialized using exactly the same infrastructure, or how distinct are they really?
We will now conclude today's call.
Thomas Blanton: I know we don't have a BDUFA data out there, so you don't really have anything to aim for.
Operator: One moment for our next question.
Raghuram Selvaraju: And from a business development perspective, as you look to optimize the value of these assets, are you looking at treating them as a package deal, or would you look to potentially, for example, execute something from a business development perspective on 108 independent of 109?
Thomas Blanton: I was thinking about Field Force expansion and how you're going to support that commercially.
Operator: And our next question, coming from the lineup, Ram Subbaraju with HC Wainwright.
Thomas Blanton: Will all those decisions be made post-decision since you don't have a heads-up, or how are you thinking about that sequencing?
Operator: Your line is open.
Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.
Daniel Barber: Right.
Raghuram Selvaraju: Thanks so much for taking my questions.
Daniel Barber: So we would expect there would be some back and forth with the FDA prior to receiving a decision. Whether that's a matter of a couple of days or a week, it really depends on how they reach out to us.
Raghuram Selvaraju: Firstly, with respect to Symposan, can you talk a little bit about how Girls2Net has been evolving lately and where you expect that direction to go over the course of the coming months and quarters?
Daniel Barber: But in terms of launching LibraVan, we remain ready to launch LibraVan immediately upon approval.
Raghuram Selvaraju: Sure.
Daniel Barber: And I'll pass it over to my colleague Ken in a second, but what I would say is we are focused on launching LibraVan within our means, is the way I would put it.
Kenneth Marshall: Good morning, Ram, and I'll hand it over to Ken on that.
Daniel Barber: You will not see us hire 40 reps the next day or bring on a large new portion of debt to the company.
Kenneth Marshall: I just want to reiterate that we continue to grow every quarter.
Daniel Barber: We will launch within the means that we have, and we think we can do that very efficiently.
Kenneth Marshall: And this asset is valuable to the organization, and we want to make sure it continues to expand and that patients continue to have access to it.
Kenneth Marshall: Ken, if you could just elaborate a little bit on the launch plans for Liverhood.
Kenneth Marshall: Ken, could you walk through your growth strategy a little bit?
Kenneth Marshall: Sure.
Kenneth Marshall: And, Ram, was the question growth strategy or Grows2Net?
Kenneth Marshall: Happy to, Dan.
Raghuram Selvaraju: I'm sorry.
Kenneth Marshall: Good morning, Thomas.
Raghuram Selvaraju: It broke up a little bit.
Kenneth Marshall: Probably the key step here is stock in the trade.
Raghuram Selvaraju: Oh, Grows2Net.
Kenneth Marshall: That usually takes you about 30 days.
Raghuram Selvaraju: Grows2Net.
Kenneth Marshall: So there would be a little bit of room in that period to train and maybe expand targets for our current footprint.
Raghuram Selvaraju: I thought it was Grows2Net.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
Kenneth Marshall: The current footprint that Dan alluded to covers nearly two-thirds of the rescue opportunity.
Raghuram Selvaraju: Yeah.
Kenneth Marshall: As you imagine, it's pretty concentrated, and Sympathand has put us in the right place to get to know these folks.
Kenneth Marshall: I'll give you some high-level information, and then, Ernie, if you want to be more specific, jump in.
Kenneth Marshall: And so I think we're set for a very rapid launch, even if we didn't get much notice from the FDA.
Kenneth Marshall: I mean, when you look at our Grows2Net, it's fairly predictable.
Thomas Blanton: Got it.
Kenneth Marshall: If you look at our history and then anticipate some level of price increase, about half of our business is Medicaid, Medicare, and so you're going to give some of that back with the CPI penalty.
Thomas Blanton: And then just one final one for me.
Kenneth Marshall: Now, having said that, with inflation, we'll probably get a little bit of a break. So, generally, you might expect a point or two gain year over year would be not a bad estimate.
Thomas Blanton: As part of these cost-cutting measures, I know we haven't talked about anything else in the pipeline besides 109.
Kenneth Marshall: Okay, that's helpful.
Thomas Blanton: Is it fair to assume that most other things that you might have had in the pipeline are on hold at this point until Liverhood and 109 makes some forward progress?
Raghuram Selvaraju: Secondly, I wanted to ask about 109 relative to 108 and how you folks are thinking about this from a strategic as well as a clinical development perspective.
Daniel Barber: I think on hold might be too strong of a phrase.
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Daniel Barber: AQSP-108 in particular, we do continue to see a place in our pipeline for that program, and we remain excited about the profile that Steve and his team have created with that product.
Daniel Barber: I would describe the work that we're doing on that as CMC-focused work at this point.
Daniel Barber: So I don't want to say it's on hold.
Daniel Barber: What I would say is we will concentrate our resources, as I said earlier in this call, on 109 to make sure that we have progress on that program as rapidly as possible.
Daniel Barber: Great.
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Thomas Blanton: Appreciate you guys taking the questions.
Thomas Blanton: Thank you.
Operator: Thank you.
Operator: One moment for our next question.
Operator: Our next question coming from the line up, Andreas from Litwis.
Operator: Your line is open.
Andreas Argyrides: Good morning.
Andreas Argyrides: Thanks for taking our question.