Aquestive Therapeutics, Inc.

Good morning and welcome to the Request of Therapeutics second quarter 2020 conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Ms. Stephanie Carrington. Westwick Investor Relations. You may begin.

Thank you, operator. Good morning and welcome to today's call to review aggressive therapeutics results for the second quarter 2020 and business highlights. On today's call, I am joined by Keith Kendall, President and Chief Executive Officer, and John Maxwell, Chief Financial Officer, who are going to provide an overview of recent business developments and performance in the second quarter. Additional members of the leadership team will be available for Q&A. In total, we expect today's call to last approximately 60 minutes. 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 the Cuesta Therapeutics website within the investors section shortly following the conclusion of this call. To remind you, The Equestive team will be discussing some non-GAAP financial measures this morning as part of its review of second quarter of 2020 results. A description of these measures along with a reconciliation to GAAP can be found in the earnings release issues yesterday, which is posted on the investor relations section of the Equestive Therapeutics website. During the call, the company will be making forward-looking statements. I remind you of the company's safe harbor of 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 included in the company's annual report on Form 10-K filed with the SEC on March 11, 2020, and in the company's subsequent quarterly reports on Form 10-Q. 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 and regulatory approval and commercialization of its projects 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 of the date made. Actual results may differ materially from these statements. All forward-looking statements attributable to Depressive Therapeutics or any person acting on behalf are especially qualified in their entirety by this cautionary statement and the cautionary statements contained in the earnings release issued yesterday. The company seems no obligation to update its forward-looking statements after the date of this conference call, whether a result of new information, future events, or otherwise, except as required under ethical law. With that, I'll turn over the line to Keith.

Thank you, Stephanie, and thank you to everyone on the call for joining us this morning. In our remarks today, John and I will provide an update on our business for the second quarter, and as always, we will be joined by additional members of the Equestive Leadership Team during the Q&A session afterward. Our key priorities as a company always start with the safety of our colleagues, the people we do business with, and the patients and caregivers who interact with our products. During this extraordinary period, as leaders and managers of our business, we have a responsibility to ensure that to the best of our ability, while taking all steps to keep people safe, we continue to advance the important work of the company. We have carefully managed our business to be sure that our colleagues are safe and healthy, that all key elements of our business continue, including continuing to access the market for Simpazan, progressing key R&D initiatives, supporting the various FD&A review processes we are involved in, and continuing product manufacturing. The company's manufacturing facility continues to produce needed chronic use medicines for patients, including the company's proprietary product, Simpazan, and the company's licensee products such as Suboxone. Our sales team has continued to access prescribers, the majority of the time virtually, and where possible, face-to-face. And therefore, Simpazan has continued to be prescribed to these patients during this period. We continue to make significant progress as it relates to the key areas of focus for our company. First, Equestiv is continuing to market Simpazan to the same prescriber base that are potential prescribers of our product candidate, Libervant. Simpazan continued to make progress in the second quarter in all the measurement areas we view as important. Next, in late June, we filed the investigational new drug application for Equestiv 108. This therapeutic candidate is a first of its kind oral sublingual film formulation. delivering systemic epinephrine using Equestive's proprietary farm film technology in development for the treatment of anaphylaxis. Our IND has been accepted by the FDA and we expect to initiate the first PK clinical trials in the third quarter of this year. We believe Equestive 108, if approved, will be the first orally administered epinephrine-based rescue medication for this patient population. Next, Equestive continues to work with the FDA in seeking approval of LiberVant. We have been providing information, responding to their information requests, and working with the agency on inspections of our manufacturing and clinical sites. In our view, there have been no surprises in their questions or during the inspections to date. EQUESTA's lead licensee product Suboxone continues to perform as expected. In addition, Indivior just received approval for Suboxone in the EU and we understand that it will be launching Suboxone in that region in the coming months. We anticipate that the EU launch will partially offset the eroding volume of Suboxone in the United States. Finally, the Equestive team has launched a process for a potential monetization of the anticipated royalties associated with Synovion's Kinmobi sublingual apomorphine product that received FDA approval in May. In addition to triggering the approval milestones payment, once launched, we will be entitled to royalties on worldwide net sales of Kinmobi. Now let's discuss in more detail each of these key areas of focus for the company. First, we remain focused on building our CNS franchise. We are advancing the commercialization of Simpazan, whose prescribers substantially overlap with potential prescribers of Libervant. Our aim is to raise the profile of our farm film technology as a commercial precursor and complementary product in support of the Libervant opportunity. Simpazan continues to prove the build-out of our capabilities and processes in preparation for the commercial launch of LiberVant if approved by the FDA for U.S. market access. All of our commercialization efforts relating to Simpazan provide an opportunity for direct conversations with healthcare practitioners, patients, caregivers, payers, advocacy groups, and others about the value of our farm film technology. The acceptance of Simpazan by those groups is an important building block, providing a meaningful value proposition for caregivers of patients suffering from LGS, helping to drive Simpazan to expected profitability in 2021, as well as positioning LibriVent for a stronger launch if approved for market access. Despite the restrictions on face-to-face visits with prescribers as a result of the COVID-19 crisis, Simpazan continued to grow in all the key measures we view as important at this stage. We continue to focus on prescription growth and further market penetration. Shipment volumes sequentially quarter over quarter have grown 3% and by 116% over the same period last year. Q2 represented the highest shipment volume quarter for Simpazan since its launch. The prescribing base also continues to grow, 15% since the end of Q1, with over 78% of those prescribers writing multiple scripts. We now have a penetration of 22% in our focused group of prescribers. We continue to ramp up payer acceptance and currently have over 70% of commercial lives covered and 81% coverage of state Medicaid regions. Q2 claims paid rate for commercial patients was 77% and for Medicaid it was 85%. We believe our position with the payers also will help us on a launch of LiberVant. The COVID-19 pandemic has created face-to-face access challenges with healthcare providers since mid-March for our field-based sales team. virtually all of our target prescribers for Simpazan have eliminated live access to their clinics at some point in time. The Simpazan team has rapidly adopted digital tools and continues to engage with healthcare providers and their staff remotely on a frequent basis. While states are in different phases of reopening at this time, we expect to continue to have some opportunities for face-to-face visits with healthcare providers. but we'll also continue to have virtual interactions with them as well. During the pandemic, we have, to the best of our ability, assured that our sales team is safe and compliant with local regulations, but have also worked hard to maintain the sales team's connections with the prescriber and patient community that needs Simpazan. We believe that our continued prescriptions growth and net revenue demonstrates that we've been able to continue to connect with prescribers even virtually and grow this product through a difficult time. Simpazan is strategically accomplishing what was intended when we developed and launched the product last year. The work we do to continue to build the market penetration for Simpazan will be an important foundation for a successful launch of LibriVant. As we have said before, we anticipate that LiberVant, if approved for U.S. marketing access, would represent a potential $300 million net revenue stream for the company at its peak. We believe this base of commercial infrastructure, payer relationships, and sales teams well positioned with key prescribers, combined with a complementary product in our sales bag, would put Equestiv in a position to launch LiberVant quickly, and successfully if we are granted U.S. marketing approval, even in a restricted access environment. Now let's turn to Equestive 108. As expected, we filed the IND for Equestive 108 with the FDA in late June of this year. As confirmed by the FDA at the pre-IND meeting in February, This program will be reviewed by the FDA under the 505 regulatory approval pathway. Based on our interactions with the agency to date, we expect that the development program will be comprised of at least two PK clinical trials. On July 23rd of this year, we received confirmation from the FDA that it completed its safety review of the IND and concluded that we could proceed with our planned clinical trials. We expect that the first of the PK clinical trials will commence before the end of the current quarter. This first trial will be a crossover study designed to compare the pharmacokinetics and pharmacodynamics of epinephrine administered as sublingual film to that of epinephrine administered as an injection. As we do with all of our development efforts, once we have additional information from the first trial, We will meet with the FDA and confirm our path forward, which would include a pivotal PK trial, possibly in 2021. We plan to provide updates on our program over the second half of 2020 as additional information develops. Next, as we previously communicated, the NDA filing for LibriVant was accepted in January of this year, and assigned the PDUFA goal date of September 27th, 2020. We have not seen an impact from the ongoing COVID-19 pandemic in terms of our interaction with the FDA regarding the approval of LibriVant and have no indication that at this point there is any reason to believe that we are not on track for September 27th, 2020 decision as scheduled. Given the approval and the orphan exclusivity decisions will be made by different groups within the FDA, we cannot be sure that we will receive feedback for both decisions simultaneously. There is a possibility that the orphan exclusivity decision may not be received until some short period of time following the PDUFA goal date, if approved on that date. We have been engaged with the agency, providing information, responding to their information requests, as well as their ongoing inspections of our manufacturing and clinical sites. The information requests received over the past few months are in line with our expectations, and we have been able to respond completely and in a timely manner to all information requests received to date. From our perspective, there have been no surprises in the information requests or in the inspections to date. We are seeking to demonstrate to the FDA that LibriVant will, if approved for U.S. marketing access, represent a major contribution to patient care within the meaning of the FDA regulations and guidance as compared to currently available device-driven based treatment operations. Libravant would also expand patient choice as the first orally delivered diazepam-based product available to manage seizure clusters. We believe we can demonstrate to the FDA why Libravant as an orally delivered product has one or more of the attributes required by the FDA to be considered a major contribution for patient care. While the dialogue continues with the FDA for approval of Libravant and access to the market, We cannot assure the FDA's position on this and we do not anticipate that we will have any clarity on the decision until at least the scheduled PDUFA goal date. Recognizing that the orphan drug question is an element of risk and we cannot assure what the FDA's position will be, we will continue to be thoughtful and prudent about our spending choices. and are appropriately managing our pre-launch spend on Libervant and marketing expenses for Simpazan prior to having any clarity on the approval of Libervant. Subject to the FDA approval, we are committed to launching Libervant and we have the foundational commercial capabilities to do that. Finally, as I mentioned a few moments ago, we have launched our process for the potential monetization of Kinmobi royalties. In that we are in the middle of this process, we understandably will not comment further here on any specifics. We will provide an update at such time as we may complete any transaction and, of course, we'll provide an update at the time of our third quarter earnings. We look forward to updating you at the time of the release of our third quarter financial results as we advance these initiatives throughout 2020. With that, I'd like to turn the floor over to my colleague, John Maxwell, who will provide specifics of our financial performance and outlook. John?