Aquestive Therapeutics, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Q3 2020 Acquestive Therapeutics, Inc. earnings conference call. At this time, all participant lines are in a 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 one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker deck. and our speaker today, Stephanie Carrington, Westwick Investor Relations. Thank you. Please go ahead, ma'am.

Thank you, operator. Good morning and welcome to today's call. I am joined by Keith Kendall, President and Chief Executive Officer, and John Maxwell, Chief Financial Officer, who will be providing an overview of recent business developments and performance of the company in the third quarter. We expect today's call to last approximately 60 minutes. 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 Equestria's website within the Investors section shortly following the conclusion of this call. This call will also include a discussion of certain non-GAAP financial measures. A reconciliation to corresponding GAAP measures can be found in yesterday's earnings release. Before we begin, let me remind you Today's call will include forward-looking statements based on the company's current expectations. These statements reflect the company's judgment as of today only and are subject to risks and uncertainties that could cause actual results to differ materially from those described in these statements. The company undertakes no obligation to revise or update these forward-looking statements in light of new information or future events except as required by law. These risks and uncertainties are discussed in greater detail in the company's quarterly report on Form 10-Q filed today in greater detail under the caption, Risk Factors. With that, I will now turn the line over to Keith.

Thank you, Stephanie, and thank you to everyone on the call for joining us this morning. In our remarks, John and I will provide an update on our business for the third quarter, and as always, we'll be joined by additional members of the Equestrian Leadership Team during the Q&A session afterward. During the third quarter, requests have continued to make progress as it relates to the key drivers of value for the company. First, Simpazan continues to perform against all important metrics despite the ongoing COVID-19-related restrictions on face-to-face interactions with healthcare providers. We're continuing to market Simpazan for the same prescriber-based and our potential prescribers of our product candidate, Libervant. Simpizan retail shipment volume grew 18% third quarter over second quarter. Next, as previously announced, the company is taking steps to address the issues raised in the FDA's complete response letter that we received in September regarding our new drug application for Libervant. After submitting a meeting package to the FDA in October, received confirmation that the FDA agreed to have a Type A meeting with us set for November 12, 2020. A Type A meeting, as you know, is granted for candidate drugs on hold to discuss impending issues and a path forward for approval. We look forward to meeting with the FDA to discuss the information we submitted and to seek feedback on the resubmission of our MDA for liver bands. We believe that we've provided a strong set of facts supporting our NDA. We will update the market once minutes of the meeting are finalized regarding the FDA's comments, our plans for resubmitting our NDA, and the potential range of PDUFA dates for Libervan. Additionally, in the quarter, we commenced the phase one pharmacokinetic trial for Equestive 108 in August and completed trial enrollment in October. This therapeutic candidate is a first-of-its-kind oral sublingual film formulation delivering systemic epinephrine. Once we receive and analyze all of the data from this trial, we'll provide further guidance on the next stages of development as appropriate for this product. We believe Equestive 108, if approved, will be the first orally administered epinephrine-based rescue medication for this patient population. Finally, the Equestiv team entered into a monetization agreement with Marathon Asset Management, a leading global investment firm, for up to $125 million for the anticipated royalties associated with Synovian's Kinmobi sublingual apomorphine product that received FDA approval in May 2020. This transaction, along with our continued expense and capital management activities, will provide a capital runway for the company through the third quarter of 2021 and potentially beyond. 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're 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. Cifazan 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. The acceptance of Simpizan is an important building block, providing a meaningful value proposition for caregivers of patients suffering from Lennox-Gastaut syndrome, as well as positioning LibriVant for a stronger launch. Despite the limitations created by the continuing COVID-19 crisis that restrict our sales team to mostly virtual interactions with healthcare providers, Simpazan continues to see market penetration and prescription growth. Shipment volumes sequentially quarter over quarter has grown 18% and by 130% over the same period last year. During that same period, we also continued to grow our prescriber base, which now approaches 700 healthcare providers, representing over 30% penetration into our focus group of prescribers. with over 77% of those prescribers writing multiple scripts. Those healthcare providers are critical to the continued success of Simpazan and will be critical to the success of LiberVant once launched upon FDA approval for US market access. Simpazan revenue grew with 102% increase in net revenue for the three-month period ended Q3 2020 versus Q3 2019. and an 86% increase in net revenue to the nine-month period ending Q3 2020 versus 2019. We continue to ramp up payer acceptance and currently have over 72% of commercial lives covered and 82% coverage of state Medicaid regions. The actual third quarter claims paid rate for commercial patients was 85% and for Medicaid, 88%. We believe our position with the payers also will help us with the potential launch of liver vans. During the pandemic, we have, to the best of our ability, ensured 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 growth in prescriptions and net revenue demonstrates that we've been able to continue to connect with the prescribers, even virtually, and grow this product through extraordinary times. Next, as we previously communicated, we received a complete response letter from the FDA for LiberVant in late September. As we outlined during a previous conference call on this topic in September, we were very disappointed that our NDA was not approved. and are taking immediate action to address the agency's concerns. As you may recall, the FDA limited its comments to one out of the nine studies that Equestiv included in our NDA submission for this product. The study in question under the CRL was the single-dose crossover PK study in 28 patients that we refer to as study 180323. In the study, LibriVant exceeded the AUC measure when compared to Diastat, was within normal comparability ranges for CMAX, and had a TMAX within the published Diastat label. We were quite pleased with these results. However, the FDA noted in its CRL that in the study there were two weight groups where the CMAX ratio comparing LibriVant to Diastat were not as close to comparability as the FDA would like to see. The FDA had no further comments on the study or in any of the other weight groups. No other safety, clinical, pharmacological, biopharmaceutics, CMC, or other non-clinical issues were identified in the CRL. As we indicated on our September 25th conference call, We intended to submit data and information to the agency quickly to attempt to resolve their questions. After submitting the meeting packets to the FDA in October, we received confirmation that the FDA scheduled a Type A meeting with us set for November 12, 2020. Again, a Type A meeting is granted for candidate drugs on hold to discuss impeding issues and a path forward for approval. We included in our October submission additional data and analysis to demonstrate that we have sufficient information to update our label with an adjusted dosing regimen. We look forward to meeting with the FDA where we will discuss the information we presented to the agency in October, attempt to confirm the pathway for approval, and propose the immediate resubmission of our NDA. If the FDA agrees with our proposal, then we plan on resubmitting the NDA before the end of the year. The review cycle for a resubmission of this type is typically six months. However, given the narrowness of the resubmission, we will request an expedited review cycle of two months, as is our right. This decision will be completely at the discretion of the FDA. Under a six-month review cycle, our targeted PDUFA action date would occur in the first half of 2021. If the FDA does not agree with our proposal, then we will seek to understand the best path forward for resubmission and approval. We will update the market regarding the FDA's comments, our plans for resubmitting our NDA, and the potential range of PDUFA dates for LibraVant once meeting minutes are finalized. To date, there have been no indications in our discussions with the agency relating to market access for LiberVan, and we do not expect any indication until product approvability is decided. Regarding FDA approval of U.S. market access, we believe that we have provided a strong set of facts supporting a decision by the FDA of clinical superiority to prior approved drugs for this indication. based upon a finding that LibriVant represents a major contribution to patient care. We will augment and update that information to the agency prior to any new PDUFA date for LibriVant. Subject to FDA approval, we are committed to quickly launching LibriVant and have the foundational commercial capabilities to do that. Next, let's turn to Equestive 108. As previously reported, the FDA granted Fast-Track designation for Equestive 108 in August 2020. Fast-Track is an FDA process designed to facilitate the development and expedite the review of therapies to treat serious conditions and fulfill unmet medical needs. In doing so, the agency acknowledged that Equestive 108 satisfies an unmet need in the patient population relating to those patients resisting taking intramuscular or subcutaneous injections. In August, we also initiated the phase one pharmacokinetic trial for this exciting product. The trial featured a four treatment crossover design comparing the pharmacokinetics and pharmacodynamics of Equestive 108 to two different doses of subcutaneous injection and one of intramuscular injection. The study included secondary endpoints for changes in blood pressure and heart rate. We have completed the enrollment of this study with 28 healthy volunteers dosed as of October and are on track to QC that data in the coming weeks. Once our review is completed, we will update everyone as appropriate regarding the results of the study and on our clinical and regulatory path forward. If approved by the agency, Equestive 108 will be the first orally administered epinephrine-based rescue medication for this patient population. Finally, as I mentioned a few moments ago, we've signed an agreement as expected with respect to the monetization of the royalties and other amounts due to the company under our license agreement with Synovian Pharmaceuticals for Kim Moby. and Apomorphine Therapy using our farm film technology for the treatment of off episodes in Parkinson's disease patients. Kinmobi received approval from the FDA on May 21st, 2020. The company entered a royalty monetization agreement with Marathon Asset Management that will result in proceeds to the company of up to $125 million upon meeting certain milestones. We believe the valuation of the royalties of Kinmobi seen in this transaction reflect the strong value farm film can bring to CNS and other disease conditions like epilepsy. Net proceeds of the transaction will fund the company's ongoing development and commercialization of its proprietary product pipeline candidates, as well as the repayment of certain senior notes and working capital for the company. We expect that this transaction will close and fund later this month. As John will explain in more detail, we also were able to extend our senior credit facility reopeners to the end of 2021, giving us a longer opportunity to obtain a potential additional $30 million of capital linked to the PDUFA date and approval of LibraVan. This financing, along with the potential access to the reopeners, provides Equestive with immediate and substantial capital to reduce debt, support key initiatives of the company, including supporting the FDA approval of LibriVent and the ongoing clinical development of Equestive 108. We are delighted to have partnered with Marathon Asset Management and our senior credit facility lenders for this important milestone for Equestive. Once closed, the monetization transaction will provide a capital runway for the company through the third quarter of 2021 and potentially beyond. The 30 million of senior note reopeners, assuming LibraVant approval and market access, which cannot be guaranteed, provide additional capital options to fund the launch of LibraVant after approval. With that, I would like to turn the floor over to John. who will provide specifics of our financial performance and outlook. John?