Full Press Release Details
Aquestive Therapeutics Reports Second Quarter 2020 Financial Results and
Provides Business Update: AQST-108 Progress Remains On Track; Libervant PDUFA Goal Date
Warren, N.J., August 4, 2020 - Aquestive Therapeutics, Inc. (NASDAQ:AQST), a pharmaceutical company focused on developing and commercializing differentiated products that
address patients' unmet needs and solve therapeutic problems, announced today reported financial results for the second quarter ended June 30, 2020 and provided an update on recent developments in its business.
Keith J. Kendall, President and Chief Executive Officer of Aquestive, stated, "While continuing to navigate the health crisis caused by the COVID-19 pandemic and, to the best of our ability, fulfilling
our responsibility to keep our colleagues and neighbors safe, we are advancing the important work of the Company, as expected, and ensuring the medications our patients depend on each day remain available to them without interruption. We are
pleased that Sympazan continued its commercial growth during the second quarter. Also, in July 2020, the FDA accepted our IND for AQST-108, our drug candidate in development to deliver systemic epinephrine for the treatment of anaphylaxis, and
we are progressing toward commencing our planned PK trials expected later in the third quarter of this year. Concurrently, we are continuing to advance through the FDA review process for our product candidate, Libervant (diazepam) Buccal Film for the management of seizure clusters, including providing information to the agency, responding to its information requests and working with the agency on its inspection of our manufacturing and clinical investigational sites. With the commercial foundation we have built for Sympazan, we will be prepared to launch Libervant quickly, if approved by the FDA for U.S.
marketing access. The formal process for a potential monetization of our KYNMOBI royalty asset is ongoing."
Proprietary Pipeline Overview and Business Update
Aquestive is building a portfolio of differentiated therapeutics that can offer physicians and patients, who have difficulty using currently available treatment options,
improved clinical and usability features based on the Company's PharmFilm technology. The Company's proprietary products and late-stage product candidates are initially focused on CNS conditions and other patient populations with high unmet need.
Second Quarter 2020 Financials
Total revenues were $21.7 million in the second quarter 2020, compared to $11.1 million in the second quarter 2019. This year-over-year increase reflected license fees
and royalty revenue in the second quarter of 2020 primarily related to $12 million recognized as a result of the KYNMOBI approval, of which $8 million is non-cash revenue related to minimum royalties that will be received over future years. In
addition, Aquestive saw revenue growth in the second quarter of 2020 compared to the prior year period of 59% for Sympazan, the first of its proprietary products to be launched, offset in part, by lower year-over-year performance of Suboxone .
Aquestive's net loss for the second quarter 2020 was $2.3 million, or $0.07 loss per share. The net loss for the second quarter 2019 was $20.5 million, or $0.82 loss per
share. The change in net loss was driven by higher revenue and reductions in costs and expenses, primarily in research and development and selling, general and administrative expenses in the second quarter 2020, compared to the second quarter
2019, partially offset by higher interest expense.
Earnings before interest, taxes, depreciation and amortization, share-based compensation and other adjustments (adjusted EBITDA) was $2.9 million in the
second quarter 2020, compared to $16.2 million of losses in the comparable prior period. The year-over-year change in adjusted EBITDA was driven primarily by higher revenue and reductions in costs and expenses, primarily in research and
development and selling, general and administrative expenses in the second quarter 2020, compared to the second quarter 2019, partially offset by higher interest expense.
As of June 30, 2020, cash and cash equivalents were $25.4 million.
Aquestive is re-affirming its full year 2020 financial outlook. The Company's full year guidance does not include the revenue recognized this quarter as a result of minimum royalty payments that will be
received over future years from KYNMOBI.
The Company expects:
The novel coronavirus pandemic continues to evolve and the extent to which it may impact Aquestive's ongoing and future business operations, financial results and
resources, or the success of the Company's commercial and candidate products, including Libervant, will depend on future developments which are uncertain.
Tomorrow's Conference Call and Webcast Reminder
The Company will host a conference call at 8:00 a.m. ET on Wednesday, August 5, 2020. Investors and analysts may participate in the conference call by dialing (866)
417-5886 from the U.S. and (409) 217-8235 internationally, followed by the conference ID: 6069891.
There will also be a simultaneous, live webcast available on the Investors section of the Company's website at https://investors.aquestive.com/events-and-presentations.
The webcast will be archived for 30 days.
About Aquestive Therapeutics
Aquestive Therapeutics is a pharmaceutical company that applies innovative technology to solve therapeutic problems and
improve medicines for patients. Aquestive is advancing a late-stage proprietary product pipeline to treat CNS and other conditions and provide alternatives to invasively administered standard of care
therapies. The Company also collaborates with other pharmaceutical companies to bring new molecules to market using proprietary, best-in-class technologies, like PharmFilm , and has proven capabilities for drug development and commercialization.
Non-GAAP Financial Information
This press release and our webcast earnings call regarding our quarterly financial results contains financial measures that do not comply with U.S. generally accepted
accounting principles (GAAP), such as Adjusted EBITDA, non-GAAP adjusted gross margins, non-GAAP adjusted costs and expenses and other adjusted expense measures, because such measures exclude, as applicable, share-based compensation, interest
expense, interest income, depreciation, amortization, and income taxes.
Specifically, the Company adjusts net income (loss) for loss on the extinguishment of debt; certain non-cash expenses, including share-based compensation expenses;
depreciation and amortization; and interest expense, interest income and income taxes, with a result of Adjusted EBITDA. Similarly, manufacturing and supply expense, research and development expense, and selling, general and administrative expense
were adjusted for certain non-cash expenses of share-based compensation expense and depreciation and amortization. Adjusted EBITDA and these non-GAAP expense categories are used as a supplement to the corresponding GAAP measures to provide
additional insight regarding the Company's ongoing operating performance.
These measures supplement the Company's financial results prepared in accordance with GAAP. Aquestive management uses these measures to analyze its financial results, and
its future manufacturing and supply expenses, gross margins, research and development expense and selling, general and administrative expense and to help make managerial decisions. In management's opinion, these non-GAAP measures provide added
transparency into the operating performance of Aquestive and added insight into the effectiveness of our operating strategies and actions. We may provide one or more revenue measures adjusted for certain discrete items, such as fees collected on
certain licensed products, in order to provide investors added insight into our revenue stream and breakdown, along with providing our GAAP revenue. Such measures are intended to supplement, not act as substitutes for, comparable GAAP measures and
should not be read as a measure of liquidity for Aquestive. Adjusted EBITDA and the other non-GAAP measures are also likely calculated in a way that is not comparable to similarly titled measures reported by other companies.
In providing outlook for non-GAAP adjusted EBITDA and non-GAAP gross margin, we exclude certain items which are otherwise included in determining the comparable GAAP
financial measures. In order to inform our outlook measures of non-GAAP adjusted EBITDA and non-GAAP gross margin, a description of the 2019 and 2020 adjustments which have been applicable in determining non-GAAP Adjusted EBITDA and non-GAAP gross
margin for these periods are reflected in the tables below. In providing outlook for non-GAAP gross margin, we adjust for non-cash share-based compensation expense and depreciation and amortization. We are providing such outlook only on a non-GAAP
basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments for the forward-looking period such as share-based compensation expense, income tax, amortization, and
certain other adjusted items, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or
in the aggregate, to reported results.
Forward-Looking Statement
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "anticipate,"
"plan," "expect," "estimate," "intend," "may," "will," or the negative of those terms, and similar expressions, are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements
regarding therapeutic benefits and plans and objectives for regulatory approvals of AQST-108, LibervantTM and our other product candidates; ability to obtain FDA approval and advance AQST-108, Libervant and our other product candidates
to the market, statements about our growth and future financial and operating results and financial position, regulatory approval and pathways, clinical trial timing and plans, our and our competitors' orphan drug approval and resulting drug
exclusivity for our products or products of our competitors, short-term and long-term liquidity and cash requirements, cash funding and cash burn, business strategies, market opportunities, and other statements that are not historical facts. These
forward-looking statements are also subject to the uncertain impact of the COVID-19 global pandemic on our business including with respect to our clinical trials including site initiation, patient enrollment and timing and adequacy of clinical
trials; on regulatory submissions and regulatory reviews and approvals of our product candidates; pharmaceutical ingredient and other raw materials supply chain, manufacture, and distribution; sale of and demand for our products; our liquidity and
availability of capital resources; customer demand for our products and services; customers' ability to pay for goods and services; and ongoing availability of an appropriate labor force and skilled professionals. Given these uncertainties, the
Company is unable to provide assurance that operations can be maintained as planned prior to the COVID-19 pandemic.
These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results
to differ materially from those described in the forward-looking statements. Such risks and uncertainties include, but are not limited to, risks associated with the Company's development work, including any delays or changes to the timing, cost and
success of our product development activities and clinical trials and plans; risk of delays in FDA approval of Libervant and our other drug candidates or failure to receive approval; risk of our ability to demonstrate to the FDA "clinical
superiority" within the meaning of the FDA regulations of our drug candidate Libervant relative to FDA-approved diazepam rectal gel and nasal spray products including by establishing a major contribution to patient care within the meaning of FDA
regulations relative to the approved products as well as risks related to other potential pathways or positions which are or may in the future be advanced to the FDA to overcome the seven year orphan drug exclusivity granted by the FDA for the
approved nasal spray product of a competitor in the U.S. and there can be no assurance that we will be successful; risk that a competitor obtains FDA orphan drug exclusivity for a product with the same active moiety as any of our other drug
products for which we are seeking FDA approval and that such earlier approved competitor orphan drug blocks such other product candidates in the U.S. for seven years for the same indication; risk inherent in commercializing a new product (including
technology risks, financial risks, market risks and implementation risks and regulatory limitations); risks and uncertainties concerning any potential monetization of royalty and other revenue stream of KYNMOBI (apomorphine), including timing,
structure, terms and market conditions of any such potential monetization and of sufficiency of net proceeds of any such monetization after satisfaction of and compliance with 12.5% Senior Notes obligations, as applicable; risk of development of
our sales and marketing capabilities; risk of legal costs associated with and the outcome of our patent litigation challenging third party at risk generic sale of our proprietary products; risk of sufficient capital and cash resources, including
access to available debt and equity financing and revenues from operations, to satisfy all of our short-term and longer term cash requirements and other cash needs, at the times and in the amounts needed; risk of failure to satisfy all financial
and other debt covenants and of any default; risk related to government claims against Indivior for which we license, manufacture and sell Suboxone and which accounts for the substantial part of our current operating revenues; risk associated with
Indivior's cessation of production of its authorized generic buprenorphine naloxone film product, including the impact from loss of orders for the authorized generic product and risk of eroding market share for Suboxone and risk of sunsetting
product; risks related to the outsourcing of certain sales, marketing and other operational and staff functions to third parties; risk of the rate and degree of market acceptance of our product and product candidates; the success of any competing
products, including generics; risk of the size and growth of our product markets; risks of compliance with all FDA and other governmental and customer requirements for our manufacturing facilities; risks associated with intellectual property rights
and infringement claims relating to the Company's products; risk of unexpected patent developments; the impact of existing and future legislation and regulatory provisions on product exclusivity; legislation or regulatory actions affecting
pharmaceutical product pricing, reimbursement or access; claims and risks that may arise regarding the safety or efficacy of the Company's products and product candidates; risk of loss of significant customers; risks related to legal proceedings,
including patent infringement, investigative and antitrust litigation matters; changes in government laws and regulations; risk of product recalls and withdrawals; uncertainties related to general economic, political, business, industry, regulatory
and market conditions and other unusual items; and other uncertainties affecting the Company described in the "Risk Factors" section and in other sections included in our Annual Report on Form 10 K, in our Quarterly Reports on Form 10-Q, and in our
Current Reports on Form 8-K filed with the Securities Exchange Commission (SEC). Given those uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as of the date made. All subsequent
forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. The Company assumes no obligation to update forward-looking statements or outlook or guidance
after the date of this press release whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Additional Information Regarding FDA Regulations and Guidance on
"Major Contribution to Patient Care"
The FDA's response to the Company's Citizen's Petition dated November 1, 2019 includes the following in discussing orphan drug exclusivity, including pertinent factors
that may be considered by the FDA in making a determination of "major contribution to patient care" for "clinical superiority" as: convenient treatment location; duration of treatment; patient comfort; reduced treatment burden; advances in ease and
comfort of drug administration; longer periods between doses; and potential for self-administration:
Section 527 of the Federal Food, Drug, and Cosmetic Act defines "clinically superior" to mean "the drug provides a significant therapeutic advantage over and above an already approved or licensed drug in
terms of greater efficacy, greater safety, or by providing a major contribution to patient care." The orphan-drug regulations elaborate on the definition of "clinically superior" as follows:
Clinically superior means that a drug is shown to provide a significant therapeutic advantage over and above that provided by an approved drug (that is otherwise the same
drug) in one or more of the following ways:
Greater effectiveness than an approved drug (as assessed by effect on a clinically meaningful endpoint in adequate and well controlled clinical
trials). Generally, this would represent the same kind of evidence needed to support a comparative effectiveness claim for two different drugs; in most cases, direct comparative clinical trials would be necessary; or Greater safety in a substantial
portion of the target populations, for example, by the elimination of an ingredient or contaminant that is associated with relatively frequent adverse effects. In some cases, direct comparative clinical trials will be necessary; or In unusual