Q3 2023 Aquestive Therapeutics Inc Earnings Call

November 7, 2023

Good morning, and welcome to Quest It Therapeutics third quarter 2023 conference call. At this time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again as a reminder, this call will be recorded.

I'd now like to introduce your host for today's conference call Bennett Watson of ICR Westwick Investor Relations you may begin.

Thank you operator, good morning, and welcome to today's call on today's call I'm joined by Dan Barber, Chief Executive Officer, and Irving Chief Financial Officer, who are going to provide an overview of recent business developments.

<unk> for the <unk>.

Third quarter 2023, followed by a Q&A session.

During the Q&A session with the team will be joined by Dr. Carl crowd, Chief Medical Officer, Ken Marshall, Chief Commercial Officer, and Dr. Steven <unk> Senior Vice President Research and development.

As a reminder, the company's remarks today correspond with the earnings release that was issued after market closed yesterday.

In addition, a recording of today's call will be made available on our questions website within the investors section. Shortly following the conclusion of this call.

To remind you <unk> will be discussing some non-GAAP financial measures. This morning as part of its review of third quarter 2023 results.

A description of these measures along with a reconciliation to GAAP can be found in the earnings release issued yesterday, which is posted on the investors section of our questions website.

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 included in the company's annual.

<unk> on Form 10-K filed with the Securities Exchange Commission on March 31st 2023, and in our subsequent 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 there are significant risks and uncertainties with respect to the company's business and the development regulatory approval and commercialization of its products and other matters related to operations.

Given these uncertainties you should not place undue reliance on these forward looking statements, which speak only as of the date made.

Actual results may differ materially from these statements all forward looking statements attributable to request it or any person acting on its behalf are expressly qualified in their entirety by this cautionary statement and the cautionary statements contained in the earnings release issued yesterday.

The company assumes no obligation to update its forward looking statements. After the date of this conference call, whether as a result of new information future events or otherwise, except as required under applicable law.

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

Thank you Beth.

I am pleased to say that we have been able to accelerate the transformation of requested over the last few months.

We achieved important milestones across the clinical regulatory and financial parts of the business.

Our last earnings call.

Let me start with our most recent news.

We were excited to refinance our debt last week I'm pleased with how our new lender a large leading institutional investor has worked with us to maintain flexibility in our business.

The $45 million facility provides for interest only payments into mid 2026, well past, our upcoming important clinical and regulatory milestones importantly.

Importantly, this agreement contains no revenue EBITDA or cash covenants.

Include zero warrants.

And allows us the flexibility to launch or partner, both NFL and liberman as we deem appropriate if approved by the FDA.

And despite the fed funds rate, having increased by over 120% since our last financing in 2019, our interest rate remained fixed and increased by only one percentage point from the prior debt deal we.

We are truly pleased with this outcome.

This brings me to another important financial point.

This past quarter marked the second quarter in a row during which are non-GAAP adjusted EBITDA remained positive after removing our adjusted R&D costs.

Simply put if we weren't investing in the clinical development of NFL epinephrine Sublingual film our business would have a positive non-GAAP adjusted EBITDA through the first nine months of 2023.

This along with our continued strong revenue guidance positions us well as we start to focus on 2024.

In fact, our revenue guidance for 2023 has increased by over 25% from our original guidance provided earlier in the year.

Ernie will talk more about our results in a few minutes.

Now, let me turn to our pipeline.

Investing in the clinical development of Ana film remains the top priority.

We continue to believe <unk> has the potential to transform the company and believe this transformation could happen in 2024.

As we reported in October we were pleased with the Fda's feedback on the design for our pivotal phase III program.

We are reaffirming our guidance that we will start the phase III pivotal study this quarter and expect to provide top line data in the first quarter of 2024.

Completing our phase III pivotal study will represent a major clinical milestone for the company.

We also continue to believe that patient demand for an oral epinephrine product for the treatment of severe allergic reactions, including anaphylaxis remains high.

Now with nasal sprays delayed we believe the benefits of an orally administered epinephrine rescue medication are more apparent than ever.

Literature and survey data clearly show that many patients fail to carry their epinephrine rescue medical device and even when they have it with them patients fail to use their device.

Our survey data suggests that patients often take an oral antihistamine pill, such as Benadryl before using the rescue medical device.

We believe Ana film is the only oral rescue product under development for Anaphylaxis has the potential to replace the incorrect use of anti histamines and thereby speed up time to symptom abatement.

One thing allergist universally agree on is that early use of epinephrine is critical to treating anaphylaxis.

Beyond the potentially significant carry and use benefits of NFL the pharmacodynamic clinical data from our recent studies.

The blueprint for a compelling improvement.

According to medical experts during anaphylaxis the release of Histamines causes blood vessels to expand thereby rapidly dropping an individual's mean arterial pressure or map.

Maintaining map supports the necessary pressure for vital organs, such as the brain and heart function normally and reduces the risk of anaphylaxis related outcomes such as loss of consciousness.

In our studies and a film has been shown to preserve map in contrast to auto injectors that have not done so.

We are excited about the potential implications for patients.

And our medical team will spend more time talking about this data as we move into 2024.

To sum up.

We believe the projected timeline to FDA approval and market entry compared to the variety of nasal sprays underdevelopment is now much tighter than it was the.

The potential carry end use benefits remains significant.

And our mean arterial pressure or map data continues to be compelling when compared to auto injectors.

Now turning to Liberman, we continue to progress towards our April 2020 for SBA target action date for our NDA for patients between two and five years old.

At this time there are no open inquiries with the FDA regarding our NDA for this patient group and we have no reason to believe the FDA won't meet the action date.

Market data shows a 31% increase in prescriptions in the two to five year old space during the third quarter 2023, when compared to the third quarter of 2022.

Well over 90% of these scripts were for diazepam rectal gel.

The only FDA approved drug for this age group.

We continue to believe the need for an oral product in this space is significant.

And look forward to working with the FDA to bring liberman to these patients as soon as possible.

We must remind you that in addition to the usual approval risks, we cannot guarantee that even with approval. The FDA will allow liberman access to the U S market.

We also continue to believe that based on past behaviors competitors may actively seek to block the use of liberman. Despite its potential benefits to this critical patient population.

Now, let's turn to our epinephrine prodrug platform.

I am pleased today to talk about advancements in our epinephrine project platform, which we have branded as the drivers.

We have completed the initial formulation of a topical product using the <unk> platform and plan on testing this formulation and humans in the coming months.

Based on preclinical data, we have seen rapid absorption of epinephrine across ports in tissue.

As you know epinephrine is available constrictor and does not penetrate well through the skin.

However, our <unk> platform may allow for absorption, thereby creating the potential use of this product for a variety of dermatological conditions.

The unmet need and prevalent in some of these conditions is significant.

We look forward to sharing our findings as we progress this initiative.

Our business development activities remain ongoing.

Our liberman in anecdotal discussions continue and regions around the world.

We also continue to believe that as we meet our expected clinical and regulatory milestones, we will be able to generate significant funding from business development transactions.

Our base business remains strong we.

We anticipate continued growth and remain focused on expanding our business capabilities in 2024.

In summary, the third quarter was yet another crucial quarter for the company.

We refinanced our debt.

We raised our revenue guidance and narrowed our non-GAAP adjusted EBITDA guidance for 2023.

We progressed, our anecdote program and continue to plan for a Q4 start to a pivotal study.

We progressed, our liberman two to five year old application and remain on track.

We completed our initial topical formulations of our <unk> platform.

And we continue to see growth in our base business.

With that I will turn the call over to Ernie.

Thank you Dan and good morning, everyone.

By now you have seen our financial results in our earnings release that was issued last evening as.

As we typically do we will address most of the discussion related to the third quarter 2023 results into Q&A.

During the third quarter, we continued to execute on our financial strategy to strengthen our financial position by refinancing our outstanding debt as well as managing expenses to extend our cash runway to support the continued development of our lead product and a film that first.

Only non device based.

We deliver epinephrine product.

We recently announced the refinancing of our outstanding obligations under the 12, 5% senior secured notes, having a maturity date of June 32025.

The new financing of $45 million by a large leading institutional investor will be used to repay all outstanding obligations under the prior credit facility and for general corporate purposes.

The notes are senior secured obligations of aggressive and will mature on November one 2028.

The notes bear interest at a fixed rate of 32, 5% per year payable quarterly.

<unk> will be repaid starting on June 32020.

Importantly, the notes contained no revenue or cash covenants and no warrants for purchase of the company's common stock were issued under the terms of the transaction.

The structure of this non dilutive refinancing transaction maximizes our flexibility in the short term and reduces our cash requirements by approximately $28 million through June 32025, the due date of the original credit facility.

Despite very difficult market conditions, the investors' willingness to invest in our future.

An important step forward in the continued growth of requested.

Now, let's turn to the recap of our quarterly and year to date financial results.

Excluding the impact of prior year proprietary sales of sympathy than.

Total revenues increased from $9 2 million.

In the third quarter of 2000 $22 million to $13 million in.

In the third quarter of 2023.

This 42% increase in revenue was primarily driven by higher revenue from the company's five out licensed products.

Total reported revenues were $13 million in the third quarter of 2023 compared to 11 5 million in the third quarter of 2022.

For the third quarter 2023, compared to the prior period, we saw a 193% increase in license and royalty revenue primarily due to simple then and it stars.

A 36% increase in manufacturing and supply revenue from Suboxone, and <unk> and a 24% increase in co development and research fees.

Excluding the impact of prior year proprietary sales is simpler than total revenues increased from $29 9 million for the nine months ended September 32022 to $37 4 million for the nine months ended September 32023.

An increase of 25%.

Total reported revenues were 37 4 million for the nine months ended September 32023, compared to $37 million.

For the nine months ended September 32022.

The increase was primarily due to increases in manufacturer and supply revenue and license and royalty revenue offset by the absence of proprietary product sales subsequent to the out licensing agreement with <unk> in October 2022.

Net loss for the third quarter of 2023 was $2 million or <unk> <unk> loss per share.

The net loss for the third quarter, 2022 was $12 5 million or <unk> 23 loss per share.

The change in net loss was primarily driven by increases in revenue as previously described decreases in selling general and administrative expense.

Including severance costs and lower administrative costs and our commercial organization subsequent to the out licensing of sympathy than in October 22, a decrease in noncash interest expense.

The decrease in research and development costs and expenses.

Our net income for the nine months ended September 32023 was <unk> 2 million.

The net loss for the nine months ended September 32022 was $42 1 million or 90 loss per share.

non-GAAP adjusted EBITDA loss was $1 3 million in the third quarter of 2023 compared to a non-GAAP adjusted EBITDA loss of $7 7 million in the third quarter of 2022.

non-GAAP adjusted EBITDA income, excluding our continued investment in research and development was $1 7 million for the third quarter of 2023 compared to a non-GAAP adjusted EBITDA loss, excluding adjusted R&D expenses of $4 <unk>.

$6 million.

In the third quarter of 2022.

Cash and cash equivalents were $24 9 million as of September 32023.

Under the at the market or ATM facility, we access point $2 million during the third quarter of 2023 and $5 $3 million. During the nine months ended September 32023.

The ATM facility has approximately $27 $8 million available at September 30 of 2023.

In addition, during the nine months ended September 32023, approximately $8 7 million common stock warrants were exercised with proceeds of approximately $8 3 million.

We continue to be focused in 2023 on the advancement of our epinephrine program and commencing our pivotal PK clinical trial in the fourth quarter.

The box don't currently continues to retain a strong presence in both the U S commercial and CMS markets and continues to provide a growth opportunity outside the U S.

We anticipate additional revenue from our licensed products during the remainder of 2023.

And Moreover, we will continue to focus on capital conservation to extend our cash runway as far as possible.

As outlined in the press release issued last night after market close.

Based on our third quarter results and positive outlook for the remainder of 2023, we have revised our full year 2023 financial guidance as follows.

Total revenues increased to approximately $47 million to $50 million from $44 million to $48 million.

And non-GAAP adjusted EBITDA loss narrowed to approximately $14 million to $17 billion.

19 million to $22 million.

Please note our revenue guidance for 2023, no longer includes proprietary net sales for <unk> due to the out licensing agreement with <unk>, but does include manufacturer and supply revenue and royalty fees.

In addition, our guidance for 2023 includes continued focused R&D investments related to the continued development of the NFL. The first and only non device based orally delivered epinephrine product.

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

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby will be compile the Q&A roster.

Our first question comes from the line of Jason Butler with JMP Securities. Your line is open.

Hi, Thanks for taking the questions and congrats on all the progress, especially the <unk>.

Refinancing.

A couple of NFL can you maybe just lineup for us at a high level of differences in design between the two PK pivotal trials and then do you plan on conducting these sequentially or when will you initiate the second PK pivotal study. Thanks.

Good morning, Jason.

Good to hear your voice so.

And thank you for the congrats on the refinancing obviously, we're pleased as well on NFL.

A good place to start let me give you a couple of my thoughts and then I will I will pass it over to Karl Kraus, Our Chief Medical Officer, who can walk you through how he thinks about it from a design perspective.

A lot of how we are approaching.

The final set of studies, we need to do here really comes from what we've learned in the marketplace.

And from the FDA directly right. So we've heard.

What the our.

Our competitors the nasal sprays are put in the public domain, we've obviously been interacting with the FDA and the one common theme that we really have.

<unk> been able to see is the FDA has been very consistent.

Very consistent in what Theyre looking for and what they want to see in order to allow a product in the market and that gives us a lot of confidence in our approach and quite frankly, what they want to see.

Is enough data to get them comfortable that patients in all settings can use the product and have an effective dose that is rapidly administered right. So obviously with the nasal sprays.

Feeling with the congestion issue for US we outlined previously in our end of Phase II study of the things the FDA focused on with US. So that's what's led us to the set of studies that were about to perform.

And I will turn it over to Carl who can walk you through how he's thinking about the design of the studies.

Good morning, Jason Thank you for the question so.

The studies that were detailed really.

Revolving around first the adult pivotal and then subsequently the pediatric the adult pivotal.

We've already reviewed with the agency they have provided US agreement on all the key elements of that study.

We've only included now some additional elements that will.

Resulting in some data that will address sustainability questions regarding repeat dose so that would be included in that will begin.

As planned in Q4 of this year and data readout in Q1 of next year and then the subsequent study the pediatric will help to secure alignment on the on the design, but it should be in accord with with a standard pediatric study for the 30 kilograms and.

And above pediatric population, so no no real surprises.

Working on making sure that we have the protocol.

Tidied up and provided to the agency for agreement.

Great and then just real quick on the prodrug platform can you just speak to the predictive value of the porcine data.

When you think about applications in human clinical studies.

Our model that's been validated in the past.

So Jason in a second I will I will pass it over to Steve where <unk>, our head of R&D, who I know you know, but keep in mind, we have been working with.

Different animal models, especially the mini pig model.

For I don't know if 15 years. So this is this is a model we know well, but Steve if you could give your thoughts.

Yes, I would be happy to.

<unk> model is.

As a well known established model for for sublingual delivery, particularly.

The anatomy and physiology of the subtle.

Sounds like it won't mucosa.

Where absorption occurs has the same structure thickness and features with it.

Joseph structure straw.

Structure features.

To the human and.

That is the model that we've been used it for a very long time, when we find it to be very informative.

Great. Thanks for taking the questions.

One moment for our next question.

Our next question comes from the line of Francoise <unk> with Oppenheimer. Your line is open.

Hi, Thanks for taking the questions and congrats also on the progress.

My first one here I just wanted to ask about in terms of the <unk> in the press release it mentions.

Comparable to auto injectors and then it also talks about the study design being against I am injunction I just wanted a little clarity on.

Are you are you only going against I am are you still going out too.

A couple different auto injectors and in terms of that.

The PK for the pivotal thank you.

Thanks Frank.

I think the global comment and again I will hand, it over to Karl to walk through the design, but I think one really important thing to remember.

For us as we go into this pivotal study is theres nothing new we are doing here, we have compared ourselves to the auto injectors and two the manual and <unk>.

<unk> through our outer development.

So this is really a larger scale confirmatory approach to what we've already done but Karl can remind you of how we think about the bracketing process.

Yes, I think thats the critical word which is it's not a.

A comparison to one particular agent, but a bracketing target between.

<unk> referenced drug product. So in this instance, it would be.

The manual injector as well as auto injectors and demonstration that.

We are bracketed over a particular time course that partially you see that had been discussed and reviewed at the last Advisory Committee meeting and we do have agreement on the endpoints are those partially you see C. Max.

<unk> on the sample size and of course agreement on the <unk> approach.

The.

The pivotal nature of the study now of course includes the.

Added element of demonstration of sustainability, which was expected for the repeat but overall the intent here is to demonstrate that.

Our expanding that population so that we can demonstrate bracketing between the currently use agents in the marketplace.

Okay, Great and then just in terms of the pediatric versus adult. So are you are you, giving is that fourth quarter started first quarter I assume that's not necessarily for the pediatric side and then also <unk>.

Mentioned three supportive studies in the press release are those can.

Can you just discuss if that's part of the fourth quarter started first quarter data and then sorry to bombard you with this last one but because we talk about pediatric and adult can you just help us understand the difference in market opportunity between the two here. Thank you.

So I'll have Carl.

Talk to you about the difference in the studies and timing.

And then <unk>.

And if you could one karl's done top Ken Marshall, our Chief Commercial officer, if you could talk about the <unk>.

Commercial opportunity.

Yes, so regarding timing the only study that we are.

Going to move forward with from an operational perspective this year it would be the pivotal for the adult.

As I said earlier will require further dialogue with the agency regarding agreement on trial design for the pediatric.

And then as far as the supportive studies that were previously noted.

A prior press release.

Those are potential studies that will be required for the full NDA submission that will be completed in 2024, but specific timing has not yet been placed on the calendar nor have we full agreement and dialogue with the agency.

The specifics of those study designs. So for really the elements that we know were going to happen with the particular places on the calendar. It is just the pivotal and that will happen in Q4 of this year.

Thank you Kevin.

Yes, I'll take the second part of that question.

And looking at it from a weight based standpoint, rather.

As we will probably be labeled.

90% of the market uses the adult dose.

The overwhelming majority of using the <unk> III, usually up to about eight five or six youre using the junior dose, which represents about 10% of the opportunity.

Okay. Thank you very much.

One moment for our next question.

And our next question comes from the line of Andreas <unk> with Wedbush Securities. Your line is open.

Good morning. This is Caroline on for Andrea and thank you for taking our questions. We just have a couple.

So just curious what the gating factor is to be getting the pivotal PK study.

This quarter and then on the pediatric study when do you plan to start the process of aligning with the FDA on the design is it still reasonable to assume that the trial would be complete by the middle of next year, and then I have a follow up.

Sure Yes.

So those are pretty straightforward Caroline so Carl I'll address these for Caroline There is no gating factor for the pivotal PK study starting in Q4, it's just the process of getting it up and running right. So.

We are.

All operational pieces that we're focused on.

And in terms of the pediatric.

Study.

We have been in dialogue with the FDA and continue to be in dialogue with the FDA on the final design of that study. So it's not that we have not approached them and it's going to be a new discussion. So we feel comfortable that.

Especially as we get data from the adult study that the pediatric study will be in a good place to.

To begin in terms of the timing.

Obviously.

Conducting a pediatric study as always.

<unk> has a little more complication in an adult but given the size that we believe this study will be in the scope. We do not believe it is an expensive or long study to run.

So yes, we do see that the timing we've laid out is reasonable.

Okay, Great and then I just have one additional question on live event and the 12 year old and older population can you just provide any additional insight into the work youre doing to remove the exclusivity block and bring this product to market.

Sure Yeah, I would love to.

Give you and the rest of the community a lot of insight into this area.

It is not an area that at this time, we can share a lot. So I would think of liberman.

This way in terms of how it fits into our company.

I do believe live event is a potential.

Important catalyst in 2020 for call it kind of the upside wildcard.

The two to five year old application.

We feel good about we think there's a real need in that space and we think it's a <unk>.

Sizeable opportunity to matter. So we are very focused on on that at this point, especially with the near term.

<unk>.

Target action date ahead of us, but we have not lost sight of the 12 and up.

Application as well.

And we continue.

To believe that there are avenues to bringing.

Our application to market ahead of orphan drug exclusivity exploration for the competing product.

Okay, great. Thank you and congrats on all the progress.

Thanks Caroline.

One moment for our next question.

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

Hey, good morning, guys and I apologize if I missed this dam, but.

With respect to the.

Upcoming.

He is not going on whether the pivotal is supportive.

Are the timelines and the October 9th press release still valid.

I missed it but it sounded like some of them, where there is only going to be the pivotal study in the fourth quarter and I know you guys. Once the fourth quarter first quarter window in that in the press release, but I just wanted to confirm that nothing had shifted from some of those expectations and at least in my mind, we're kind of set.

No.

Thank you Thomas I'm actually glad you asked that question. So we can clarify yes. The timelines that we put in October press release, just a few weeks ago remain the same.

The additional ore supportive studies that Frank asked about before and Carl walked you through.

Just remember these are smaller studies, so a temperature study of ph study.

Those are.

Not significant bodies of work that.

That take months and months to complete so in terms of <unk>.

Completing them and where we will complete them throughout the year, we feel comfortable that.

Bye.

<unk>.

The end of next year, we'll have gotten through.

The work that we need to know.

Where we are in the application process.

Great and then.

I don't want to beat it.

The deliberate, but 2% to 5% too much but.

I'm just curious because there isn't an orphan drug exclusivity in that age group or at least it doesn't appear to be is there still a dual process review going on one with the review division and one with the.

Orphan drug folks.

Yes.

The process remains the same so the Cedar group the review division within the SBA will.

Complete their review in either give a.

An approval or whatever else they give on the action date as they would with any application and then at the exact same time our understanding is.

The orphan drug group would give its position on whether the.

Patient population is free from an exclusivity block or whether they believed deem it to be blocked by exclusivity. So we do expect based on what we know that both would happen at the same time.

Got it understood understood and just a quick one for.

Ernie.

And I know that tends to be variability here, but there was a substantial bump.

Bump in gross margin just any comments on sustainability of that or should we expect it to be relatively variable going forward.

Hi, Thomas Nice to hear your voice so no on the gross margin, we would expect it to trend.

Where it is on a year to date basis going forward.

Got it I appreciate you taking the questions. Thank you.

One moment for our next question.

Our next question comes from the line of Rod crime Southern Rodriguez with H C. Wainwright. Your line is open.

Thanks, very much for taking my questions. I was just wondering if it would be possible for you to offer some additional context around the target dermatological indications that you would intend to pursue with the topical formulation that you would.

I had mentioned earlier during your prepared remarks.

Yes.

Thanks, Rob.

And so.

I think the best way to approach, giving you more information on that front is there are a variety of indications that we could look at but it really depends on.

How the absorption process works as we go through this first study.

So I think a good way to.

Educate all of our listeners would be Steve if you could talk a little bit about how you see the absorption process happening and what you think the potential effects of that could be.

With our with our <unk> platform.

Sure happy to so.

Sure.

With our molecules, we believe the <unk>.

Our platform allows us to to get absorption.

Straight epinephrine cannot achieve.

Nature of the molecule both in terms of.

The way it can absorb as well as the basal constriction.

And the way to interact with the body.

And so we believe we're going to.

We are looking to evaluate how we absorb.

How quickly we absorb it in.

Residents time Tolerability.

Et cetera.

Okay.

This is a trend reverse platform through the skin and from that it's going to really allow us to hone in on.

How applicable to the different indications that we have.

Got it.

Signals for non clinically and some of it is it is.

TBD.

Moving forward with this platform and our initial studies is going to really inform the path forward there.

Look forward to being able to share more of that with you.

As the data comes together.

So Rob I know.

In fairness you are looking to hear about what the indications are and what the opportunities are I think once we have that data as Steve laid out.

Can really start being more specific and giving you more detail on that front.

Do you have a sense at this juncture as to whether these might include both acute as well as chronic indications.

Karl do you want to take that one.

Yes.

Reiterate what Steve and Dan mentioned the.

<unk> targeted indications would be reflective of what we learn from.

<unk> and the penetration.

Germany Horizon.

It will be premature to determine what indications may benefit from this intervention until we have more data on the on the preclinical front.

Okay, and then just one quick question Clarice a clarification on the debt financing.

It stated in the press release that the note holders are entitled to a tiered royalty of between 1% and 2% of worldwide net sales of <unk> and.

<unk> told me earlier of either the first sale of NFL.

And eight years from the first sale of <unk>, So I'm assuming that if.

What you expect let's call it a best case scenario.

<unk> for both live event and NFL. This tiered royalty on worldwide net sales of Liberals and.

Would not likely persist for a very long am I thinking about that correctly.

Yes, no as soon as there is a sale of an NFL product anywhere on the globe.

The liver Vin royalty goes away you have that exactly right.

Thank you.

Thanks, Ron.

And as a reminder to ask a question. Please press star one on your phone.

One moment for our next question.

Our next question comes from James Molloy with Alliance Global Partners. Your line is open.

Hey, guys. Thanks for taking my question just a quick question on the.

The remaining trials, what's the all in cost of the remaining trials and again presuming things go well.

In the trials put out the data anticipated should whats your expectation for being ready for an NDA filing.

Yes.

I'll start with the second question first.

Good morning, Jim.

As of right now we continue to guide that we will file by the end of 2024, we have from.

What we shared.

The last couple of times from our August earnings call and from our October press release, nothing has changed on that timing.

In terms of the all in cost of the studies that are left to be run we haven't.

Given that we haven't put that number together and put it out publicly.

Ill pass it over earning a second Casey has more color he wants to provide but what I would leave you with is that remember these are pharmacokinetic studies in healthy volunteers.

So they are very cost efficient studies that that or not.

Not expensive to run, but Ernie did you want to add anything.

No I think what you said considering that we have not given any any public.

Guidance on this number that.

It's not an expensive study for us to complete.

We are well on our way there.

Okay.

Okay, Great and maybe two quick follow ups. Thank you for that.

Any competitive intelligence on.

Competitor <unk> pharma and Murphy re filing of our NDA and I guess you guys are you guys don't split and that you guys will see.

I will ask for an outcome for you guys.

Yes, so the only competitive intelligence, we have on Murphy is exactly what you or other people in the public domain.

We only hear what's in the public domain, so I'll leave it to <unk> and the team there to to define what that means for them in terms of an AD com I think that is.

Unknown at this point, we will of course be prepared if that is something the FDA does what.

You could argue.

Either way on that one you can say well the FDA has already done that come in this space why would they do another one.

You could say we are a different dosage form maybe they want to spend some time with.

People in an outcome study either way, we will be ready.

Great. Thank you for taking the questions.

Thanks, Jim.

And I'm showing no further questions at this time I would like to turn the conference back to Dan Barber for closing remarks.

Thank you Amy.

And thank you for joining us this morning as you've heard we're very pleased with the Q3 2023 results that we just discussed.

And we remain excited for the potential that lies ahead for us and for the company and we look forward to speaking with all of you again soon.

Have a good day.

This concludes today's conference call. Thank you for participating you may now disconnect.

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Good morning, and welcome to Cuesta Therapeutics third quarter 2023 conference call. At this time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one one on your telephone.

Then here an automated message advising your hand is raised to withdraw your question. Please press star one one again as a reminder, this call will be recorded I would now like to introduce your host for today's conference call. Then at Watson of ICR Westwick Investor Relations you may begin.

Thank you operator, good morning, and welcome to today's call on today's call I'm joined by Dan Barber, Chief Executive Officer, and <unk>, Chief Financial Officer, who are going to provide an overview of recent business developments and performance for the third quarter 2023, followed by a Q&A session.

As a reminder, the company's remarks today correspond with the earnings release that was issued after market closed yesterday.

In addition, a recording of today's call will be made available on our questions website within the investors section. Shortly following the conclusion of this call.

To remind you for your question Tim will be discussing some non-GAAP financial measures. This morning as part of its review of third quarter 2023 results.

A description of these measures along with a reconciliation to GAAP can be found in the earnings release issued yesterday, which is posted on the investors section of our questions website.

During the call the company will be making forward looking statements. We remind you of the company's safe Harbor language as outlined in Yesterdays earnings release, as well as the risks and uncertainties affecting the company as described in the risk factors section and other sections included in the company's annual group.

Port.

<unk> 10-K filed with the Securities Exchange Commission on March 31st 2023, and in our subsequent quarterly reports on Form 10-Q, and current reports on form 8-K filed with the SEC.

Given these uncertainties you should not place undue reliance on these forward looking statements, which speak only as of the date made.

Actual results may differ materially from these statements.

All forward looking statements attributable to requested or any person acting on its behalf are expressly qualified in their entirety by this call.

Generic statement and the cautionary statements contained in the earnings release issued yesterday.

Company assumes no obligation to update its forward looking statements. After the date of this conference call, whether as a result of new information future events or otherwise, except as required under applicable law.

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

Thank you Beth.

I am pleased to say that we have been able to accelerate the transformation of requested over the last few months.

We achieved important milestones across the clinical regulatory and financial parts of the business.

Our last earnings call.

Let me start with our most recent news.

We were excited to refinance our debt last week I'm pleased with how our new lender a large leading institutional investor has worked with us to maintain flexibility in our business.

The $45 million facility provides for interest only payments into mid 2026.

Well past, our upcoming important clinical and regulatory milestones.

Importantly, this agreement contains no revenue EBITDA or cash covenants include zero warrants.

And allows us the flexibility to launch or partner, both NFL and liberman as we deem appropriate if approved by the FDA.

And despite the fed funds rate, having increased by over 120% since our last financing in 2019, our interest rate remained fixed and increased by only one percentage point from the prior debt deal.

We are truly pleased with this outcome.

This brings me to another important financial point.

This past quarter marked the second quarter in a row during which are non-GAAP adjusted EBITDA remained positive after removing our adjusted R&D costs.

Simply put if we weren't investing in the clinical development of NFL epinephrine Sublingual film our business would have a positive non-GAAP adjusted EBITDA through the first nine months of 2023.

This along with our continued strong revenue guidance positions us well as we start to focus on 2024.

In fact, our revenue guidance for 2023 has increased by over 25% from our original guidance provided earlier in the year.

Ernie will talk more about our results in a few minutes.

Now, let me turn to our pipeline.

Investing in the clinical development of NFL remains the top priority.

We continue to believe <unk> has the potential to transform the company and believe this transformation could happen in 2024.

As we reported in October we were pleased with the Fda's feedback on the design for our pivotal phase III program.

We are reaffirming our guidance that we will start the phase III pivotal study this quarter and expect to provide top line data in the first quarter of 2024.

Completing our phase III pivotal study will represent a major clinical milestone for the company.

We also continue to believe that patient demand for an oral epinephrine product for the treatment of severe allergic reactions, including anaphylaxis remains high.

Now with nasal sprays delayed we believe the benefits of an orally administered epinephrine rescue medication are more apparent than ever.

Literature and survey data clearly show that many patients failed to carry their epinephrine rescue medical device and even when they have it with them patients fail to use their device.

Our survey data suggests that patients often take an oral antihistamine pill, such as Benadryl before using the rescue medical device.

We believe the NFL is the only oral rescue product under development for Anaphylaxis has the potential to replace the incorrect use of anti histamines and thereby speed up time to symptom abatement.

One thing allergist universally agree on is that early use of epinephrine is critical to treating anaphylaxis.

Beyond the potentially significant carry and use benefits of NFL the pharmacodynamic clinical data from our recent studies.

The blueprint for a compelling improvement.

According to medical experts gearing anaphylaxis the release of Histamines causes blood vessels to expand thereby rapidly dropping an individual's mean arterial pressure or map.

Maintaining map supports the necessary pressure for bio organs, such as the brain and heart function normally and reduces the risk of anaphylaxis related outcomes such as loss of consciousness.

In our studies and a film has been shown to preserve map in contrast to auto injectors that have not done so.

We are excited about the potential implications for patients.

And our medical team will spend more time talking about this data as we move into 2024.

To sum up we.

We believe the projected timeline to FDA approval and market entry compared to the variety of nasal sprays underdevelopment is not much tighter than it was the.

The potential carry end use benefits remains significant.

And our mean arterial pressure or map data continues to be compelling when compared to auto injectors.

Now turning to Liberman, we continue to progress towards our April 2020 for SBA target action date for our NDA for patients between two and five years old.

At this time there are no open inquiries with the FDA regarding our NDA for this patient group and we have no reason to believe the FDA won't meet the action date.

Market data showed a 31% increase in prescriptions in the two to five year old space during the third quarter 2023, when compared to the third quarter of 2022.

Well over 90% of these scripts were for diazepam rectal gel.

The only FDA approved drug for this age group.

We continue to believe the need for an oral product in this space is significant.

And look forward to working with the FDA bring liberman to these patients as soon as possible.

We must remind you that in addition to the usual approval risks, we cannot guarantee that even with approval. The FDA will allow liberman access to the U S market.

We also continue to believe that based on past behaviors competitors may actively seek to block the use of liberman. Despite its potential benefits to this critical patient population.

Now, let's turn to our epinephrine prodrug platform.

I am pleased today to talk about advancements in our epinephrine project platform, which we have branded as the drivers.

We have completed the initial formulation of a topical product using the <unk> platform and plan on testing this formulation and humans in the coming months.

Based on preclinical data, we have seen rapid absorption of epinephrine across ports in tissue.

As you know epinephrine is available constrictor and does not penetrate well through the skin.

However, our adrenalin platform may allow for absorption, thereby creating the potential use of this product for a variety of dermatological conditions.

The unmet need and prevalent in some of these conditions is significant.

We look forward to sharing our findings as we progress this initiative.

Our business development activities remain ongoing.

Liberman in anecdotal discussions continue and regions around the world.

We also continue to believe that as we meet our expected clinical and regulatory milestones, we will be able to generate significant funding from business development transactions.

Our base business remains strong we.

We anticipate continued growth and remain focused on expanding our business capabilities in 2024.

In summary, the third quarter was yet another crucial quarter for the company.

We refinanced our debt.

We raised our revenue guidance and narrowed our non-GAAP adjusted EBITDA guidance for 2023.

We progressed, our Amazon program and continue to plan for a Q4 start to a pivotal study.

We progressed, our liberman two to five year old application and remain on track.

We completed our initial topical formulations of our <unk> platform.

And we continue to see growth in our base business.

With that I will turn the call over to Ernie.

Thank you Dan and good morning, everyone.

By now you've seen our financial results in our earnings release that was issued last evening as.

As we typically do we will address most of the discussion related to the third quarter of 2023 results into Q&A.

Oh, a non device based orally delivered epinephrine product.

We recently announced the refinancing of our outstanding obligations under the 12, 5% senior secured notes, having a maturity date of June 32025.

The new financing of $45 million.

By a large leading institutional investor will be used to repay all outstanding obligations under the prior credit facility and for general corporate purposes.

The notes are senior secured obligations of requested and will mature on November one 2028.

The notes bear interest at a fixed rate of 32, 5% per year payable quarterly.

<unk> will be repaid starting on June 32025.

Importantly, the notes contained no revenue or cash covenants and no warrants for purchase of the company's common stock were issued under the terms of the transaction.

Despite very difficult market conditions, the investors' willingness to invest in our future.

An important step forward in the continued growth of requested.

Now, let's turn to the recap of our quarterly and year to date financial results.

Excluding the impact of prior year proprietary sales of sympathy in.

Total revenues increased from $9 2 million in the third quarter of 2000 $22 million to $13 million in.

In the third quarter of 2023.

This 42% increase in revenue was primarily driven by higher revenue from the company's five out licensed products.

Total reported revenues were $13 million in the third quarter of 2023.

<unk> to $11 5 million in the third quarter of 2022.

For the third quarter 2023, compared to the prior period, we saw a 193% increase in license and royalty revenue primarily due to simple then and as stars.

36% increase in manufacturing and supply revenue from Suboxone, and <unk> and a 24% increase in co development and research fees.

Excluding the impact of prior year proprietary sales is simpler than total revenues increase from $29 9 million for the nine months ended September 32022 to $37 4 million for the nine months ended September 32023.

An increase of 25%.

Total reported revenues were $37 4 million for the nine months ended September 32023, compared to $37 million from the nine months ended September 32022.

Net loss for the third quarter of 2023 was $2 million <unk> loss per share.

The net loss for the third quarter, 2022 was $12 5 million or <unk> 23 loss per share.

The change in net loss was primarily driven by increases in revenue as previously described.

Increases in selling general and administrative expense.

Including severance costs and lower administrative costs and our commercial organization subsequent to the out licensing is simpler than in October 22, a decrease in noncash interest expense and a decrease in research and development costs and expenses.

Our net income for the nine months ended September 32023 was <unk> 2 million.

The net loss for the nine months ended September 32022 was $42 1 million or 90 loss per share.

non-GAAP adjusted EBITDA loss was $1 $3 million in the third quarter of 2023 compared to a non-GAAP adjusted EBITDA loss of $7 $7 million in the third quarter of 2022.

$6 million in the third quarter of 2022.

Cash and cash equivalents were $24 9 million as of September 32023.

Under the at the market or ATM facility, we access point $2 million during the third quarter of 2023 and $5 $3 million. During the nine months ended September 32023.

The ATM facility has approximately $27 $8 million available at September 32023.

In addition, during the nine months ended September 32023, approximately $8 7 million common stock warrants were exercised with proceeds of approximately $8 3 million.

We continue to be focused in 2023 on the advancement of our epinephrine program and commencing our pivotal PK clinical trial in the fourth quarter.

The box zones currently continues to retain a strong presence in both the U S commercial and CMS markets and continues to provide a growth opportunity outside the U S.

We anticipate additional revenue from our licensed products during the remainder of 2023.

Moreover, we will continue to focus on capital conservation to extend our cash runway as far as possible.

As outlined in the press release issued last night after market close.

Based on our third quarter results and positive outlook for the remainder of 2023, we have revised our full year 2023 financial guidance as follows.

Total revenues increased to approximately $47 million to $50 million from $44 million to $48 million.

And non-GAAP adjusted EBITDA loss narrowed to approximately $14 million to $17 billion.

From 19 million to $22 million.

Please note our revenue guidance for 2023, no longer includes proprietary net sales for <unk> due to the out licensing agreement with <unk>.

It does include manufacturer and supply revenue and royalty fees and.

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

Our first question comes from the line of Jason Butler with JMP Securities. Your line is open.

Hi, Thanks for taking the questions and congrats on all the progress, especially the asset.

Debt refinancing.

A couple of NFL can you, maybe just outline as far as at a high level of differences in design between the two PK pivotal trials and then do you plan on conducting these sequentially or when will you initiate the second PK pivotal study. Thanks.

Good morning, Jason good.

Good to hear your voice so.

And thank you for the congrats on the refinancing obviously, we're pleased as well on NFL.

Think a good place to start let me give you a couple of my thoughts and then I will I will pass it over to Karl Kraus, Our Chief Medical Officer, who can walk you through how he thinks about it from a design perspective.

A lot of how we are approaching.

The final set of studies, we need to do here really comes from what we've learned in the marketplace.

And from the FDA directly right. So we've heard.

What the our competitors the nasal sprays and put in the public domain, we've obviously been interacting with the FDA and the one common theme that we really.

Have been able to see is the FDA has been very consistent.

Is enough data to get them comfortable that patients in all settings can use the product and have an effective dose that is rapidly administered right. So obviously with the nasal sprays. They are dealing with the congestion issue for US we outlined previously in our end of Phase II study.

Other things the FDA focused on with US. So that's what's led us to the set of studies that were about to perform.

And I will turn it over to Carl who can walk you through how he's thinking about the design of the studies.

Good morning, Jason Thank you for the question so.

The studies that were detailed really.

Revolving around first the adult pivotal and then subsequently the pediatric the adult pivotal.

We've already reviewed with the agency they have provided US agreement on all the key elements of that study.

We've only included now some additional elements that will.

Resulting some data that will address sustainability questions regarding repeat dose. So that will be included in that will begin.

As planned in Q4 of this year and data readout in Q1 of next year and then the subsequent study the pediatric will have to secure alignment on the on the design, but it should be in accord with with a standard pediatric study for the 30 kilograms and above pediatric population so no.

No real surprises.

Working on making sure that we have the protocol.

Tidied up and provided to the agency for agreement.

Great and then just real quick on the prodrug platform can you just speak to the predictive value of the porcine data.

When you think about the application to human clinical studies.

Our model that's been validated in the past.

So Jason and the second I will I will pass it over to Steve <unk>, our head of R&D, who I know you know, but keep in mind, we have been working with.

Different animal models, especially the mini pig model.

For I don't know if 15 years. So this is this is a model we know well, but Steve if you could get your thoughts.

Yes, I would be happy to maybe pick model is.

Well known established model for sublingual delivery, particularly.

The anatomy and physiology of the subtle sublingual.

Sublingual mucosa.

We're absorption occurs has the same structure thickness and features with.

We're the closest structure.

Structure features.

To the human and.

That is the model that we've been used it for a very long time, when we find it to be very informative.

Great. Thanks for taking the questions.

One moment for our next question.

Our next question comes from the line of Francoise <unk> with Oppenheimer. Your line is open.

Hi, Thanks for taking the questions and congrats on the progress.

My first one here I just wanted to ask about in terms of the <unk> in the press release it mentions.

Comparable to auto injectors and then it also talks about the study design being against high and then Jensen I just wanted a little clarity on.

Are you are you only going against I am are you still going ask too.

A couple different auto injectors in terms of the debt.

<unk> for the pivotal thank you.

Thanks Frank.

I think the global comment and again I will hand, it over to Karl to walk through the design, but I think one really important thing to remember.

For us as we go into this pivotal study is theres nothing new we are doing here, we have compared ourselves to the auto injectors and two the manual.

Tenuously through our powder development.

So this is really a larger scale confirmatory approach to what we've already done but Karl can remind you of how we think about the bracketing process.

Yes, I think thats, the critical word which is not a.

A comparison to one particular agent, but a bracketing target between.

<unk> referenced drug product. So in this instance, it would be the use of the manual injector as well as auto injectors and demonstration that we are bracketed over a particular time course at partial agencies that had been discussed and reviewed at the last Advisory Committee meeting and we do have agreement on the endpoints are those partially you see.

C. Max agreement on the sample size and of course agreement on the bracketing approach.

The pivotal nature of the study now of course includes the added element of demonstration of sustainability, which was expected for the repeat but overall the intent here is to demonstrate that we are expanding that the population. So that we can demonstrate bracketing between the currently used agents in the marketplace.

Okay, Great and then just in terms of the pediatric versus adult. So are you are you, giving is that fourth quarter start first quarter I assume that's not necessarily for the pediatric side and then.

<unk> you mentioned three supportive studies in the press release.

Just discuss if that's part of this fourth quarter started first quarter data and then sorry to bombard you with this last one but because we talk about pediatric and adult can you just help us understand the difference in market opportunity between the two here. Thank you.

So I'll have Carl.

Talk to you about the difference in the studies and timing.

And then <unk>.

And if you could when Carl has done.

Ken Marshall, our Chief commercial officer, if you could talk about the.

Commercial opportunity.

Yes, so regarding timing the only study that we are.

Going to move forward with from an operational perspective this year it would be the pivotal for the adult.

I said earlier will require further dialogue with the agency regarding agreement on trial design for the pediatric.

And then as far as the supportive studies that were previously noted.

A prior press release.

Those are potential studies that would be required for the full NDA submission that will be completed in 2024, but specific timing has not yet been placed on the calendar nor have we full agreement and dialogue with the agency about the specifics of those study designs. So for really the elements that we know well.

Going to happen with a particular place on the calendar. It is just the pivotal and that will happen in Q4 of this year.

Thank you Ken.

Yes, I'll take that the second part of that question.

And looking at it from a weight based standpoint, rather.

As the as we will probably be labeled.

90% of the market uses the adult dose. So it is the overwhelming majority of using the <unk> three usually up to about <unk> five or six youre using the junior dose.

Which represents about 10% of the opportunity.

Okay. Thank you very much.

One moment for our next question.

And our next question comes from the line of Andreas Rd rights with Wedbush Securities. Your line is open.

Good morning. This is Caroline on for Andrea and thank you for taking our questions. We just have a couple.

So just curious what the gating factor is to be getting the pivotal PK study.

Sure Yes.

So those are pretty straightforward Carolina, so Carl I'll address these for Caroline.

There is no gating factor for the pivotal PK study starting in Q4, it's just the process of getting it up and running right. So.

We are.

All operational pieces that we're focused on.

And in terms of the pediatric.

Study.

Especially as we get data from the adult study that the pediatric study will be in a good place to.

To begin in terms of the timing.

Obviously.

Conducting a pediatric study as always.

<unk> has a little more complication than an adult but given the size that we believe this study will be in the scope. We do not believe it is an expensive or long study to run.

So yes, we do see that the timing we've laid out is reasonable.

Okay, Great and then I just have one additional question on weather event, and the 12 year old and older population can you just provide any additional insight into the work youre doing to remove the exclusivity block and bring this product to market.

Sure Yeah, I would love to give.

Give you and the rest of the community a lot of insight into this area, but it is not an area that at this time, we can share a lot. So I would think of liberman.

This way in terms of how it fits into our company.

I do believe liberman is a potential.

Important catalyst in 2020 for call it kind of the upside wildcard.

The the.

Two to five year old application.

We feel good about we think there's a real need in that space and we think it's.

Sizeable opportunity to matter.

We are very focused on on that at this point, especially with the near term.

Target action date ahead of us, but we have not lost sight of the 12 and up.

Application as well.

We continue.

To believe that there are avenues to bringing.

Our application to market ahead of orphan drug exclusivity exploration for the competing product.

Okay, great. Thank you and congrats on all the progress.

Thanks Caroline.

One moment for our next question.

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

Hey, good morning, guys.

If I missed this Dan but.

With respect to the.

Upcoming studies going on whether the pivotal is supportive.

Are the timelines and the October 9th press release is still valid I may.

No no.

Thank you Thomas I'm actually glad you asked that question. So we can clarify yes, the timelines that we put in the October press release, just a few weeks ago remain the same.

The additional ore supportive studies that Frank asked about before and Carl walked you through.

Just remember these are smaller studies, so a temperature study of ph study.

Those are.

Not significant bodies of work that.

That take months and months to complete so in terms of <unk>.

<unk> them, and where we will complete them throughout the year, we feel comfortable that.

Bye.

<unk>.

The end of next year, we will have gotten through.

The work that we need to know.

Where we are in the application process.

Great and then.

I don't want to beat.

Deliberate, but 2% to 5% too much but.

Yes.

The process remains the same so the Cedar group the.

The review division within the SBA will.

Complete their review in either give a <unk>.

Provable or whatever else they give on the action data as they would with any application and then at the exact same time our understanding is.

The orphan drug group would give its position on whether the.

Patient population is free from an exclusivity block or whether they believed deem it to be blocked by exclusivity. So we do expect based on what we know that both would happen at the same time.

Got it understood understood and just a quick one for.

Ernie.

And I know that tends to be variability here, but there was a substantial bump.

Bump in gross margin just any comments on sustainability of that or should we expect it to be relatively variable going forward.

Hi, Thomas Nice to hear your voice so no on the gross margin, we would expect it to trend.

Where it is on a year to date basis going forward.

Got it I appreciate you taking the questions. Thank you.

One moment for our next question.

Our next question comes from the line of Rod crime, Southern Rajeev <unk> with H C. Wainwright Your line is open.

Thanks, So much for taking my questions I was just wondering if it would be possible for you to offer some additional context around.

The target dermatological indications that you would intend to pursue with the topical formulation that you had.

I mentioned earlier during your prepared remarks.

Yes.

Thanks, Rob.

And so.

I think the best way to approach, giving you more information on that front is there are a variety of indications that we could look at but.

But it really depends on.

How the absorption process works as we go through this first study.

So.

I think a good way to.

Educate all of.

Our listeners would be Steve you could talk a little bit about how you see the absorption process happening and what you think the potential effects of that could be.

<unk>.

With our with our <unk> platform.

Sure happy to so.

With our molecules, we believe the approach our platform allows us to to get absorption.

I'm, just trying to epinephrine cannot achieve.

The nature of the molecule both in terms of.

The way it can absorb as well as the basal constriction.

And the way to interact with the body.

And so we believe we're going to.

Looking to evaluate how we absorb.

How quickly we absorb in.

The residence time Tolerability.

Et cetera.

I'll just address diverse platform through the scan.

From that it's going to really allow us to hone in on.

How applicable as to the different indications that we have.

Got it.

Signals for non clinically and some of it is it is TBD, but the.

Moving forward with this platform and our initial studies is going to really inform the path forward, there and we look forward to being able to share more of that with you.

As the data comes together.

So Rob I know.

In fairness you are looking to hear about what the indications are and what the opportunities are I think once we have that data as Steve laid out we can really start being more specific and giving you more detail on that front.

Do you have a sense at this juncture as to whether these might include both acute as well as chronic indications.

Karl do you want to take that one.

Yes.

To reiterate what Steve and Dan mentioned.

The target indications would be reflective of what we learn from.

The <unk> and the penetration.

Germany Horizon, So I think it will be premature to determine what indications may benefit from this intervention until we have more data on the preclinical.

Front.

Okay and then just one quick question Clarice clarification on the debt financing.

It stated in the press release that the note holders are entitled to a tiered royalty of between 1% to 2% of worldwide net sales of Liberty.

Until the earlier of either the first sale of NFL and eight years from the first sale of flavor. So I'm, assuming that what you expect let's call. It a best case scenario.

<unk> for both live event and NFL.

<unk> tiered royalties on worldwide net sales of Liberty.

Would not likely persist for a very long am I thinking about that correctly.

Yes no.

As soon as there is a sale of an NFL product anywhere on the globe.

Liberman royalty goes away you have that exactly right.

Thank you.

Thanks, Ron.

And as a reminder to ask a question. Please press star one on your phone.

One moment for our next question.

Our next question comes from James Molloy with Alliance Global Partners. Your line is open.

Hey, guys. Thanks for taking my question just a quick question on.

The remaining trials, what's the all in cost of the remaining trials.

Then presumably things go well.

In the trials.

<unk> anticipated should whats the expectation for being ready for an NDA filing.

Yes.

I'll start with the second question first.

Good morning, Jim.

As of right now we continue to guide that we will file by the end of 2024, we have from.

What we shared.

The last couple of times from our August earnings call and from our October press release, nothing has changed on that timing.

In terms of the all in cost of the studies that are left to be run we haven't.

Given that we haven't put that number together and put it out publicly.

What I would have been ill pass it over earning a second and Casey has more color. He wants to provide but what I would leave you with is that remember these are pharmacokinetic studies in healthy volunteers.

So they are very cost efficient studies that that or not.

Not expensive to run, but Ernie did you want to add anything.

No I think what you said considering that we've not given any any public.

Guidance on this number that.

It's not an expensive study for us to complete.

We are well on our way there.

Okay.

Okay, Great and maybe two quick follow ups. Thank you for that.

Any competitive intelligence on.

Competitor <unk> pharma and Murphy re filing of our NDA and I guess you guys are you guys still spending that you guys will see.

It will ask for an outcome for you guys.

Yes, so the only competitive intelligence, we have on Murphy is exactly what you or other people in the public domain.

We only hear what's in the public domain, so I'll leave it to <unk> and the team there to to define what that means for them in terms of an AD com I think that is.

Unknown at this point, we will of course be prepared if that is something the FDA does want.

You could argue.

Either way on that one you can say well the FDA has already done that come in this space why would they do another one.

You could say we are a different dosage form maybe they want to spend some time with.

People in an outcome study either way, we will be ready.

Great. Thanks for taking the questions.

Thanks, Jim.

And I'm showing no further questions at this time I would like to turn the conference back to Dan Barber for closing remarks.

Thank you Amy.

And thank you for joining us this morning as you've heard we're very pleased with the Q3 2023 results that we just discussed.

And we remain excited for the potential that lies ahead for us and for the company and we look forward to speaking with all of you again soon.

Have a good day.

This concludes today's conference call. Thank you for participating you may now disconnect.

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