Full Press Release Details
Aquestive Therapeutics Reports Third Quarter 2020 Financial Results and
Provides Business Update
Warren, N.J., November 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, today reported financial results for the third quarter ended September 30, 2020 and provided an update on recent developments in its business.
"Amidst the unprecedented uncertainty of the COVID-19 pandemic, our Company has made progress this quarter in advancing our CNS product portfolio and other important therapeutics in our product pipeline, highlighted
by the completion of dosing in a Phase 1 pharmacokinetic trial for our product candidate AQST-108, a "first of its kind" oral sublingual film formulation delivering systemic epinephrine, and we are on track to assess the validity and quality of
that data in the coming weeks," said Keith J. Kendall, President and Chief Executive Officer of Aquestive. "Importantly, we are advancing our lead product candidate, Libervant (diazepam) Buccal Film for the management of seizure clusters, through
the approval process with the Food and Drug Administration (FDA). We received confirmation from the FDA that, after submitting our meeting package this past October, a review meeting with the Agency is set for November 12, 2020. We look forward
to working with the FDA in seeking feedback and clarity on the pathway for approval of Libervant. Moreover, the KYNMOBI royalty monetization transaction, which was signed this week and is expected to close and fund later this month, provides the
Company with substantial capital to support our key clinical and commercial initiatives and reduce our senior debt," concluded Mr. Kendall.
Despite limitations on provider in-person interactions caused by the COVID-19 pandemic, the Company's proprietary product Sympazan (clobazam), an oral film for the treatment of seizures associated with
Lennox-Gastaut syndrome, continues to meet key performance metrics. Shipment volume sequentially quarter over quarter has grown 18% and by 130% over the same period last year. During the third quarter 2020, Sympazan saw continued growth in the
prescriber base, approaching 700 healthcare providers, which represents over 26% penetration into the Company's focused group of prescribers, with over 77% of those prescribers writing multiple scripts. Sympazan net revenue grew 102% for the
three month period ended September 30, 2020 versus the same period last year, and 86% for the nine month period ended September 30, 2020 versus the same period last year. Sympazan currently has over 72% of commercial lives covered and an 82%
coverage of State Medicaid regions. Given the substantial overlap of prescribers, Sympazan is strategically accomplishing what was intended when it was developed and launched last year, to build an important foundation for a successful launch of
Libervant, if approved by the FDA for U.S. market access.
As indicated in the Company's investor call on September 25, 2020, the Company submitted in October the data and information it believes addresses the FDA's concerns expressed in the FDA's Complete Response Letter
relating to Libervant. The Company received confirmation that the FDA agreed to a Type A meeting with the Company to be held on November 12, 2020. A Type A meeting is granted for candidate drugs on hold to discuss impeding issues and a path
forward for approval. Based on the data and information submitted to the FDA, the Company does not believe at this time that further clinical studies are necessary. At that meeting, the Company expects to discuss the information submitted in the
October 2020 meeting package and to seek to confirm the pathway for approval and propose the immediate resubmission of the NDA for Libervant. If the FDA agrees with the Company's proposal, then the Company plans on resubmitting the NDA before the
end of the year. If the FDA does not agree with the Company's proposal, then the Company will seek to understand the best path forward for resubmission and approval. The Company will update the market regarding the FDA's comments, the Company's
plans for resubmitting the NDA, and the potential range of PDUFA dates for Libervant once meeting minutes are finalized.
After receiving Fast Track Designation from the FDA for AQST-108, the Company completed enrollment and dosing of 28 healthy volunteers in a Phase 1 pharmacokinetic (PK) trial for AQST-108 in October 2020. The trial
features a four-treatment crossover design comparing the pharmacokinetics and pharmacodynamics of AQST-108, 0.3 mg of epinephrine subcutaneous injection (subQ), 0.3 mg of epinephrine intramuscular (IM) injection, and 0.5 mg epinephrine subQ. The
study includes secondary endpoints for changes in blood pressure and heart rate. The Company is on track to assess the validity and quality of that data in the coming weeks. The Company believes that AQST-108, if approved by the FDA, will be the
first orally administered epinephrine-based rescue medication for this patient population.
As previously announced, this week the Company signed a monetization agreement for up to $125 million for its worldwide royalty rights in KYNMOBI (apomorphine HCI) sublingual film for the acute, intermittent
treatment of OFF episodes in patients with Parkinson's disease, which received approval from the FDA on May 21, 2020. The Company expects to close and fund the monetization transaction later this month. Under the terms of the monetization
agreement, the Company will receive at closing of the transaction $40 million and is eligible to receive up to the additional $85 million of contingent payments at various points, beginning as early as the fourth quarter of 2020, based on the
achievement of worldwide royalty targets and certain other commercial milestones. This includes up to $25 million potentially available between now and mid-2022. The net proceeds of the transaction will be used to repay certain senior notes and
fund the Company's ongoing development and commercialization of its proprietary product and pipeline candidates, as well as for working capital purposes. In connection with the monetization transaction, the Company will repay $22.5 million of its
senior notes and issue $4.0 million of new senior notes in lieu of paying a prepayment premium on the early repayment of the senior notes, bringing the Company's outstanding senior debt from $70 million to $51.5 million, and reducing the principal
and interest obligations under the senior note debt facility in the future.
Third Quarter 2020 Financials
Total revenues were $8.3 million in the third quarter 2020, compared to $12.4 million in the third quarter 2019. This year-over-year decrease reflected lower Suboxone manufacture and supply revenue, as well as lower
license and royalty revenue, offset partially by growth in Sympazan revenue. Aquestive saw revenue growth in the third quarter 2020 compared to the prior year period of 102% for Sympazan, the first of its proprietary products to be launched.
Aquestive's net loss for the third quarter 2020 was $16.6 million, or $0.49 loss per share. The net loss for the third quarter 2019 was $18.4 million, or $0.74 loss per share. The change in net loss was driven by
lower revenue and reductions in costs and expenses, primarily in manufacture and supply expense reflecting the lower volume of production in the third quarter 2020, compared to the third quarter 2019. In addition, the third quarter of 2019
included a $4.9 million loss on extinguishment of debt.
Non GAAP adjusted loss before interest, taxes, depreciation and amortization, share-based compensation and other adjustments (adjusted EBITDA loss) was $11.6 million in the third quarter 2020, compared to $8.4
million of losses in the comparable prior period. The year-over-year change in adjusted EBITDA loss was driven primarily by lower revenue partially offset by reductions in costs and expenses, primarily in manufacture and supply expenses, in the
third quarter 2020, compared to the third quarter 2019.
As of September 30, 2020, cash and cash equivalents were $17.1 million.
Aquestive is updating its full year 2020 financial outlook. The Company's full year guidance does not include the accounting for the monetization of the KYNMOBI royalty stream.
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 Thursday, November 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: 8266119.
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. The Company has commercialized one internally-developed
proprietary product to date, Sympazan, has a commercial proprietary product pipeline focused on the treatment of diseases of the central nervous system, or CNS, and other unmet needs, and is developing orally administered complex molecules to
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 loss, 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 loss. Similarly, manufacture 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 loss 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 manufacture 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 loss 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 loss 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 loss and non-GAAP gross margin, a description of the 2019 and 2020 adjustments which have been applicable in determining non-GAAP Adjusted EBITDA loss 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
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 and Libervant; ability to address the concerns identified in the FDA's Complete Response Letter dated September 25, 2020 regarding the New Drug Application for Libervant and obtain FDA approval of
Libervant for U.S. market access; ability to obtain FDA approval and advance AQST-108, Libervant and our other product candidates to the market; about our growth and future financial and operating results and financial position; regulatory approval
and pathway; 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 for consummating the monetization transaction for KYNMOBI and other risks and uncertainties concerning the royalty and other revenue stream of KYNMOBI, achievement of royalty targets worldwide or in any jurisdiction and certain
other commercial targets required for contingent payments under the monetization transaction, and of sufficiency of net proceeds of the monetization transaction after satisfaction of and compliance with 12.5% Senior Notes obligations, as
applicable, and for funding the Company's operations; 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 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