Good day and thank you for standing by. I would now like to introduce your host for today’s call, Bennett Watson. You may begin..

Thank you, operator. Good morning and welcome to today’s call. On today’s call, I’m joined by Keith Kendall, Chief Executive Officer and Ernie Toth, Chief Financial Officer, who are going to provide an overview of recent business developments and performance in the first quarter 2022, followed by a Q&A session.

As a reminder, the Company’s remarks today correspond with the earnings release that was issued after market close yesterday. In addition, a recording of today’s call will be made available on Aquestive’s website within the Investors section shortly following the conclusion of this call.

To remind you, the Aquestive team will be discussing some non-GAAP financial measures this morning as part of its review of first quarter 2022 results. A description of these measures, along with the reconciliation to GAAP can be found in the earnings release issued yesterday, which is posted on the Investors section of Aquestive’s website.

During the call, the Company will be making Forward-Looking Statements.

We remind you of the company’s Safe Harbor language as outlined in yesterday’s earnings release as well as the risks and uncertainties affecting the Company as described in the Risk Factors section and in other sections included in our annual report on Form 10-K filed with the Securities and 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 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 development, regulatory approval and commercialization of its products and other matters related to operations.

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 the date made. Actual results may differ materially from these statements.

All forward-looking statements attributable to Aquestive or any person acting on its behalf are expressly qualified in their entirety by this cautionary statement and the cautionary statements contained in the earnings release issued yesterday.

The Company assumes no obligation to update its forward-looking statements after the date of this conference call, whether as a result of new information, future events or otherwise, except as required under applicable law. With that, I will now turn the line over to Keith..

Thank you, Bennett. And thank you everyone on the call for joining us this morning. In our remarks today, Ernie and I will be discussing recent developments in our business during the first quarter of 2022, and through early May.

As always Ernie and I will be joined by additional members of the Aquestive leadership team during the Q&A session afterward. The Company remains keenly focused on the two most important value drivers for Aquestive, Libervant and AQST-109, related to the epinephrine program.

We recently reported positive top line data from Part 2 of the EPIPHAST crossover study for AQST-109 and commenced Part 3 of that study in late April. In mid-March, we received fast track designation for AQST-109 from the FDA. We continue to engage with the FDA regarding the ongoing review for Libervant.

And additionally, our core business remains strong in the first quarter of 2022. In April of 2022, we entered into a new equity facility for up to $40 million. We believe this is good housekeeping. That gives us an additional source of funds, as well as some flexibility and options as we fund our ongoing operations.

Let's start with Libervant, Aquestive continues to interact with the FDA regarding the orphan drug review of the NDA for Libervant. As you recall, we received a notification from the FDA indicating that the agency would not be ready to act by the PDUFA date of December 23, 2021.

The agency was unable to provide an estimate of timing of an expected action at that point in time. In correspondence we received in April of 2022 from the office of orphan product development, the agency communicated that and I quote it the agency is actively working on the orphan drug exclusivity issues related to your NDA.

OOPD is also diligently coordinate with the relevant FDA stakeholders in considering each of the arguments raised in your communications. The agency assures you that these issues are top of mind and have not fallen off the agency's radar. “Although we, the agency cannot commit to a precise date for providing a response.

We can answer that we are making all efforts to respond in a reasonable timeframe”. The company continues to believe that Libervant is an approvable product for safety and efficacy as evidenced by the completion of the pre notice requirements, such as labeling that we discussed previously.

With respect to the FDA granting market access, given the orphan drug exclusivity issue, we continue to believe that we have made a compelling case that Libervant represents a clinically superior product to the previous rectal and nasal products.

This is based on our belief that Libervant provides a major contribution to patient care as outlined in the agency's guideline. Libervant if granted market access has the potential to transform the lives of refractory epilepsy patients seeking a non-invasive and innovative product for the management of seizure clusters.

Aquestive remains prepared to launch this important product for epilepsy patients if granted market access by the FDA. With respect to epinephrine. We remain focused on advancing the clinical development of AQST-109. Our epinephrine based product candidate for severe allergic reactions, including anaphylaxis.

As a reminder, AQST-109 is the first and only orally delivered epinephrine based product candidate to demonstrate results comparable to auto injectors, such as EpiPen and Auvi-Q that are the current standards of care for the emergency treatment of severe allergic reaction.

With such a significant part of this patient population not having this medicine where they need it when they need it for a variety of reasons, including needle phobia, convenience, delayed or incorrect administration, AQST-109 represents a meaning improvement in this group of patients and caregivers lives.

In February, the FDA provided clearance for Aquestive's IND allowing clinical development in the United States. As a reminder, the agency previously confirmed the 505 b2 regulatory approval path appropriate for AQST-109. Additionally, the FDA granted fast track designation in March 2022 to 109.

Fast track is an FDA process designed to facilitate the development and expedite the review of potential therapies that seek to treat serious conditions and fill unmet medical needs.

We want to highlight that we are conducting part three of the EPIPHAST study and plan to complete one additional study in line with the guidance received from the FDA in our pre IND correspondence. We are seeking through a master robust data set for the end of Phase II meeting anticipated later this year.

In early April, we completed part two of EPIPHAST study evaluating AQST-109. The product candidates showed rapid absorption and conversion of the pro drug to epinephrine in subjects with immediate time to maximum concentration or Tmax of 15 minutes. Part two confirmed earlier results in a larger population of healthy subjects.

We are excited that we have again shown pharmacokinetic results that demonstrate delivery of epinephrine with the absorption and conversion speed necessary for a rescue product of this kind.

The Area Under the Curve or 1AUC within the clinically relevant periods of 10 minutes, 20 minutes and 30 minutes were comparable for both AQST-109 and 0.3 milligram manual IM injection.

The median time to reach a 100 pg/mL, which has been suggested to be the threshold for the onset of hemodynamic effects was eight minutes for Aquestive 109 and 10 minutes for the IM injection. Based on our interactions with the FDA, showing consistent EPIPHAST absorption is key. We commenced Part 3 of the EPIPHAST study in April, 2022.

The purpose of Part 3 is to continue to study the administration of the film under a variety of conditions and further characterize its pharmacokinetics, pharmacodynamics and safety. We anticipate completing Part 3 of EPIPHAST study by the end of the second quarter of 2022.

The additional study that we plan to conduct is designed to compare AQST-109 to EpiPen, and we expect to report top-line data from this study, during the third quarter of 2022. We plan to incorporate data from this study into our FDA data package to the end of Phase II meeting later this year.

We plan to include the data from the EPIPHAST study and the EpiPen comparative study in our data package, as per guidance received from the FDA in a written response to our pre-IMD submission. We then plan to commence the pivotal study under the U.S. IND before the end of the year.

Additionally, during the quarter, our core business continued to contribute new opportunities, as well as cash. Our Suboxone business remains resilient and continues to contribute at a higher level than expected. SYMPAZAN continue to perform and has now grown 13 straight quarters, since its approval and launch.

These will continue to contribute revenue and cash in 2022 and beyond. In summary, as we progress through the second quarter 2022, we are focused on advancing our propitiatory 30 products. We will remain in contact with the FDA regarding the application for Libervant.

The FDA is continuing to evaluate the impact of orphan drug exclusivity, as it said repeatedly in our correspondence. We believe that Libervant and approval will product for safety and efficacy, as evidenced by the completion of pre notice requirements that I discussed earlier. We are prepared to launch immediately if granted U.S. market access.

109 is advanced into Part 3 of the EPIPHAST study, after we reported positive results from Part 2. We are planning an end of Phase II two meeting with the agency in the second half and expect to commence pivotal trials before the end of the year.

And our ongoing business continues to perform well, and we look forward to delivering the strong results outlined in our release, which Ernie will discuss in a minute. We look forward to continuing to update all of you as we advance these initiatives throughout 2022.

And with that, I would like to turn the line over to Ernie who will provides specifics on our financial performance, capital access strategy and outlook. Ernie..

Thank you, Keith and good morning, everyone. By now you will have seen our financial results in our 10-Q and earnings release that were filed last evening. As we typically do, we will address most of the discussion related to the first quarter of 2022 results in the Q&A.

Overall, we saw continued strong performance from our existing business and continued contribution of cash. While Suboxone is a legacy product for us, it remains a significant part of our near-term revenue outlook. This product performed well in the first quarter and exceeded our expectations with a 41% year-over-year increase in revenue.

As Keith mentioned previously, SYMPAZAN generated sequential quarterly revenue growth for 13 straight quarters. Our trends on wholesaler shipments as SYMPAZAN to retail pharmacies, and growth in new and repeat prescribers represented a very solid 28% increase when you compare the first quarter of 2022 with the same period last year.

We anticipate continued growth for SYMPAZAN in the rest of 2022.

On April 12, the company entered into a purchase agreement with Lincoln Park Capital Fund, which provides that upon the terms and subjects of 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.

This facility, along with our ATM are important tools for Aquestive together with our strong ongoing business, our expense and capital management activities, as well as the additional funds available under our existing debt facility should Libervant be approved and gain market access, provide the tools and flexibility as we fund our ongoing business activities.

Looking forward, we expect royalty streams from license agreements to contribute to our future revenue. These royalty streams include AZSTARYS, which was launched in 2021 by Corium under licensed from KemPharm, Suboxone in markets outside of the U.S. with Indivior, EXSERVAN in the U.S.

with Mitsubishi Tanabe, and in the EU with Zambon, as well as the launch ondansetron by Hypera in Brazil following their recent approval. In addition to contributing revenue and cash to the company, these assets also represent potential opportunities to monetize streams of royalties as we did for the KYNMOBI royalties.

As outlined in the press release issued last night after market closed, we reconfirmed our full-year 2022 financial outlook. SYMPAZAN growth, the continued performance of our manufacturing and supply operations, and our other ongoing business activities are expected to provide strong results during 2022.

Spending on R&D is projected to accelerate as we continue development of AQST-109 during 2022. As a reminder, our full-year financial expectations are as follows. Total revenue is up approximately $42 million to $47 million. Non-GAAP adjusted gross margin of approximately 70% to 75%.

Non-GAAP adjusted EBITDA loss of approximately $51 million to $58 million. It is worth reiterating that this 2022 financial guidance does not include any revenues from Libervant, and will not until U.S. market accesses certain and the launches underway.

In summary, our 2022 guidance for full-year non-GAAP adjusted EBITDA loss reflects a lower projected revenue base from Suboxone as compared to 2021, partially offset by steady growth and Sympazan and significant additional focused R&D investment related to the advancement of AQST-109.

At the same time, we will continue to prudently manage our cost across our business to be as capital efficient as possible. With that, I will now turn the line back to the operator to open the line for questions..

Thank you. [Operator Instructions] And our first question comes from Gary Nachman from BMO Capital Markets. You line is now open..

Hey this is [indiscernible] on for Gary Nachman.

Couple questions for me, for Libervant, is there any more active discussions recently with the different groups of FDA, including orphan drug group? And are you still committed to launching Libervant depending on approval timing and what other options are being considered for it if any? And then I have a few follows after that?.

Sure, well good morning and thanks for the question. We remain in contact with the FDA, you know, we take, I think the unusual step of sharing the actual letters word-for-word as we get them. So everybody sees in an unvarnished way, how the agency is communicating with us. We have spoken to the office of the commissioner.

We have spoken to the head of Cedar. We have spoken to the head of OOPD. We have spoken to all of the levels within the Cedar project group, and we continue to be active with the Ombuds person in the FDA, in the commissioner's office. And we will continue to communicate with them and try to get some clarity from them.

But their answer as we just read it to you the most recently from the office of orphan drug is that they are working on it. They know it is there it is top of mind and they will get to us in a reasonable period of time, whatever that means. We will continue to try to clarify that and shake that loose.

At the same time, we will also continue to monitor the legislative progress of the refresh of the PDUFA statute, which we believe has some language in it around changes to the orphan drug law.

So we are not sure if those are related unless the agency tells us, but we will monitor that as well to understand or try to understand what the agency is thinking about Orphan drug exclusivity.

The second part of your question, we are prepared to launch, obviously we have a fiduciary responsibility to realize or extract the maximum amount of value for our assets. So if there is a better way to extract value as opposed to launching it directly, we will certainly be considerate of that..

Great and another question I had was on AQST-109, could you review the part three of EPIPHAST study and what you are hoping to show there? And then what are you planning for in terms of the pivotal PK study especially with the final formulation size and dose.

Is that still expected in the first half of 2023 and would that be sufficient for filing? Thanks..

Well, you do a great job of stuffing 12 questions into two, but I will give Dan Barber the opportunity to answer that for you..

Sure. Good morning. So, yes the final formulation size and dose, we feel very good about where we are from the Part 2 data that we recently put out.

So as Keith walked you through with that Part 2 data and as you saw in the press release, we put out a few weeks ago, we believe we had hit the key marks around Tmax, Cmax, PD and so on based on the formulation we have. So we don't see, or we don't envision at this point additional changes to the formulation size or dose.

So, that will remain the same. In terms of Part 3, as we said before, that is really additional characterization of the products in anticipation of our end of Phase II meeting in the fall. And so, what do I mean by that? We will do things that we know the FDA would like to see.

So, one is what happens if you swallow the film rather than put it under your tongue. What happens when you take the film after having a peanut butter sandwich? What happens under different dosing administration parameters? So that data is really about rounding out the data we already have.

One thing I would also point out is Keith walked through before is in the summertime, we will do a CROSSOVER study versus EpiPen, which would provide us with a nice set of data for that end of Phase II meeting.

If in that end of Phase II meeting the FDA agrees with where we are in our plan, as you mentioned in your question, we will move forward with a pivotal PK study and we would at this time, expect that to read out in the first half of 2023. I just want to make sure I answered all the parts of your question..

Yep. That was really helpful. Thanks..

Thank you. And our next question comes from Jason Butler from JMP Securities. Your line is now open..

Hi. Thanks for taking the questions. Congrats on the progress. Just a couple follow-ups on 109. I think Part 2, one of the goals was informing the powering assumptions for a potential pivotal, if you use the IM as a comparator.

Do you have any updated thoughts on whether you have that information now and what a sample size could look like for a pivotal study? And then second question just on the trial head-to-head versus, crossover versus epinephrine, other than the obvious difference of the comparator arm, any differences here in trial design versus EPIPHAST or what information you are looking to gain from this study? Thanks..

Thanks, Jason. Yes, so the first part of your question in terms of the powering for the pivotal PK study, we did get what we need from Part 2. And right now we would envision the pivotal PK study being somewhere between 80 and a 100 of the volunteers.

So in a pretty standard for what others have done with this molecule, if you look at the other injectable products like, Auvi-Q or some [indiscernible] or so on. So, that part, we feel good about where we are and the information we have.

And on the additional study that we will do in the summertime to your point it does have a different design than the EPIPHAST design. And that is because there is an additional element to it that we will use to fill out our end-of-Phase II work. So we will do - it will be 24 subjects.

It will be crossover, EpiPen 0.3 versus our product, but we will also do a repeat dosing of the film, and a repeat dosing of the IM injection. So they really are two things that will get out of that study. One will be the compare to EpiPen, and two will be the repeat dosing data, which we know is a requirement that the FDA wants to see..

Okay, great. Really helpful. And then, sorry if I missed this on Libervant, but just a clarification point.

Has the FDA asked you for any new information, in the last several weeks or since the April meeting or is it just a case of them needing to do their work and get back to you at this point?.

Yes.

Jason, they have said repeatedly since the communication in December, and every time we have talked to them since, excuse me, that there is no additional information they require from us that they have to do their work and as you heard in the last letter, they are working on it, they are focused on it, it is top of mind, I think, is the language that they use.

And they will get to us in a reasonable time, whatever that definition is for them..

Okay, thanks Keith. Thanks for taking the questions..

Yes..

Thank you. And our next question comes from Thomas Flaten from Lake Street. Your line is now open..

Great. Thanks for taking the questions just to ground out 109.

So assuming success in the pivotal study and data readout in the first half of 2023, timing for a submission to FDA would be, what second half of the year kind of late early 2024, something like that?.

Yes, Thomas, this is Dan again. Yes, if the FDA in our end of Phase II meeting agrees with our plan there would be two things that we would come out of that study doing - out of that meeting doing, one would be the pivotal PK study. And the second is - there is a - we will do a small pediatric study in parallel to the pivotal PK study.

Both of those things we see happening in the first half of 2023, and both of them would lead us to our continued goal of a filing at the end of 2023, as we see it right now..

Great.

And then back to the Libervant, are there - have you found any precedents or precedent situations where FDA's acted in a similar manner to how they have done with Libervant? Anything you can learn from what's what they have done in the past with respect to timing or outcomes, anything like that?.

There is another company that is in a similar situation to us right now. There have been other companies in the past where we - I don't know whether or not they were orphan drug related or not, but the FDA did not act on time. The FDA didn't give a follow-up date, ultimately some of those companies went to court to try to force action.

So I think with the orphan drug exclusivity issue, I'm not sure there are many precedents, I think that the FDA is following a couple of court cases, I think the FDA is trying to understand and ensure and protect exactly what authority and ability they have. And I think we are caught up in that..

Got it.

And then just one final one, any updates, anything to here on AQST-108?.

Yes. So we remain excited about the profile we have created with 108 and we do believe that there are additional indications and we have done work to identify what some of those indications could be. At this time though, we want to make sure that Libervant and 109 get to the right place.

So you will see us continue to focus on those two assets with 108 coming up behind those two as they get farther along..

Great. I appreciate you taking the question. Thank you..

Thank you. And our next question comes from Andreas Argyrides from Wedbush Securities. Your line is now open..

Good morning and thanks for taking our questions. Two for us here on 109.

First, can you help us better interpret the differences in the arithmetic and geometric mean Cmax values that were in the EPIPHAST study? And then how should we also interpret the lower AUC zero to 10 minute value, but the greater AUC zero to 20 and zero to 30 values compared to the 0.3 - epinephrine? Thank you..

Good morning Andreas. So, I will do my best on the first one without delving into the statistician world. So the main difference between arithmetic and geometric is, as I'm sure you are very aware would be how they are calculated, right. One arithmetic systems literally average and geometric is the mean of the means.

So, geometric gives you a better indication. Traditionally geometric is seen as giving you a better indication of what your number would look like in a larger population, and the difference between arithmetic and a geometric mean in this case would largely be due to variability. So we know variability with this molecule.

We know epinephrine has an inherent high level of variability, and we are continuing to focus on that as we do larger studies going forward. The second question around the AUCs at 10, 20 and 30 minutes, we feel really good about out all three of those at 10 minutes, while we are below a 100%, which I think is what you are referring to.

We are within the 80 to 125 window that you would typically broadly think of as kind of a comparable window. So I think we are in the low to mid eighties. What we like even more is at the 20 and 30 minute marks, we are above the 125. So we are at, I think 144 or something like that for the 20.

And we think that shows a significant improvement or potential for a significant improvement versus what the IM is providing. So we are really happy with the 10, 20 and 30 minute data..

Okay. That is it for me. Thank you guys..

Thank you. [Operator Instructions] And our next question comes from Ram Selvaraju from HC Waingright. Your line is now open..

Thanks very much for taking my questions.

With respect to 109, I was just wondering if you could comment on firstly, if a special protocol assessment is likely in any way to be a possible applicable route that you would seek with respect to of the FDA, for example, in the context of the end of Phase II discussions? And secondly, if you could provide us with any color on 109 commercialization or optimization of value initiatives that you may take outside of the United states..

Sure, Ram. This is Dan. I will take the first and then I will hand it over to my colleague, Ken who is here with us. We have thought about using the spa process, but we don't see it as necessary for this program.

As you know, from our understanding, one of the benefits is especially, things like fast track designation, getting fast response and good agreement with the FDA. But we don't think, with the types of studies that we are running and the availability we have with the end of Phase II meeting, that it will be necessary to take that action.

So, we are planning on a very traditional request a meeting, put a briefing book in, have our study designs in the briefing book and ask our questions in that end of Phase II study. So, I will pass it over to Ken for the commercial part..

Okay. Hi, Ram. It is Ken. Your question was optimizing value outside of the U.S. not inside the U.S..

That is right. Yes, exactly for 109 yes..

Ram, this is Keith. Typically - well, as you know, we have no intent at this point in time or at this stage in the Company's life to commercialize anything outside the United States on our own. Typically, we would wait until a product like this get a little further along, where its value is a little bit greater.

I think the time for us to start looking at partners and that is how we would do this outside the United States is we have done with some of the other approved products that we have licensed. I think the time to do that is after we get through the end of Phase II discussion with the agency.

We have good clarity around what the pivotal study would look like. And we could demonstrate that full, robust set of data to people outside the United States to get them interested in the product. That is the time we will start thinking about and start our efforts to find a partner outside the United States in the various regions..

Okay. And then with respect to Libervant, just engaging in a hypothetical here. If whatever reason Libervant does not have a path to regulatory approval in the U.S. for the moment, are there any ways to optimize its value in ex-U.S.

territories?.

Yes. I think that is a great question. Look, Libervant is a great product and Libervant is going to get to the market at the end of 2026. We are working really hard to get it to the market much sooner, based on what we believe the regulatory opportunities are. And we will continue to work as hard as we possibly can.

But Libervant is going to get to the market, it is going to compete with products. We believe it has a great chance of beating competitively, when it gets there.

Outside the United States, where, we are at a place where we were with the other products we have licensed with Libervant, where we are talking to people who may be interested in the different parts of the world in the product.

And obviously with a product that is gone through the regulatory process at the level that Libervant has those are attractive conversations. We will continue to have those until we find the partner that we like..

Okay. Thank you..

Thank you. And I’m showing no further questions. I would now like to turn the call back over to Keith Kendall for closing remarks..

Thank you, operator. Thank you everyone for joining today’s call. We appreciate your time. The next few months, obviously is going to be a critical period for Aquestive as we continue the clinical development of AQST-109, and we get prepared for the end of Phase II meeting, and begin and kickoff the pivotal trials before the end of the year.

Obviously, we are all frustrated and anxious around where we are with Libervant. We are going to continue to stay in contact with the FDA, and try to get either clarity or action from them around the Libervant filing. And as we go through all of those things, we will make sure that we stay in touch with all of you.

And we continue to share with you the progress that we make. We appreciate your time today, and we look forward to talking to you again soon..

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