Aquestive Therapeutics, Inc.

Good morning and welcome to the Equestria Therapeutics fourth quarter and full year 2021 conference call. At this time, all participants are in 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 then one on your touchstone telephone. If anyone should require assistance during the conference, please press star then zero to reach an operator. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference call, Bennett Watson of Westwick Investor Relations. You may begin.

Thank you, Operator. Good morning and welcome to today's call. On today's call, I am 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 fourth quarter and full year, 2021, 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 Equestive's 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 fourth quarter and full year 2021 results. A description of these measures, along with a reconciliation to GAAP, can be found in the earnings release issued yesterday, which is posted on the investors section of Equestria'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 factor section. and in other sections included in our annual report on Form 10-K filed with the Securities 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 insurgencies. 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 a questive 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 statement after the date of this conference call, whether as a result of new information, future events, or otherwise accept as required under applicable law. With that, I will now turn the line over to Keith.

Thank you, Bennett, and thank you to 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 fourth quarter of 2021 and through early March. As always, Ernie and I will be joined by additional members of the Equestrian Leadership Team during the Q&A session afterward. We remain as a company keenly focused on the two most important value drivers for Equestiv, Libervant and AQST109. We continue to engage with the FDA regarding the ongoing review of the NDA for Libervant. Related to our epinephrine program, we recently reported positive top line data from part one of the epifast crossover study for AQST 109 and the commencement of part two of that study. In late February, we received clearance from the FDA for the US IND for AQST 109. Additionally, our core business outperformed our expectations in 2021. As you saw in our release last night, and as Ernie will discuss more fully in a few minutes, Our full year 2021 revenue came in above the updated guidance provided in November, and our non-GAAP-adjusted EBITDA loss came in better than expected. Let's start with Libervant. On December 20, 2021, we received notification from the FDA that it would not be ready to act by the PDUFA date of December 23rd. for the company's NDA for Libervant diazepam buccal film. The agency was unable to provide an estimate of the timing of an expected action. We were surprised by the FDA's unexpected notice that they were unable to provide a decision by the PDUFA date. The agency's review division had finished its review and indicated that no additional information was necessary from the company. We had previously completed the pre-notice requirements, such as labeling negotiations, additional information requests, and post-marketing adverse drug experience reporting, or PETA, audit. Since that notice in December, we've interacted with the agency, who in their most recent correspondence in February stated the following two points, and I quote, the agency is continuing to consider whether the orphan drug exclusivity identified for another diazepam product affects the approvability of your application. Additionally, they went on to say, and I quote again, we're continuing to consider the information and arguments submitted by and on behalf of Equestiv. At this time, we cannot provide a specific update regarding timelines or an anticipated action date, close quotes. The company continues to believe that LibraVant is an approvable product for safety and efficacy, as evidenced by the completion of the pre-notice requirements I discussed a minute ago. With respect to the FDA granting market access, given the orphan drug exclusivity issue, we continue to believe we've made a compelling case that LibraVant represents a clinically superior product to their previous rectal and nasal products. based on LibraVant providing a major contribution to patient care, as outlined in the agency's guidelines. LibraVant, 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. This patient population remains underserved, with more patients over the last 12 months across all age groups, continuing to utilize the diazepam rectal gel product versus the diazepam nasal products, despite good payer coverage. The vast majority of potential patients are still not accessing either of these difficult to interact with alternatives. Providing a preferred method of delivery, an oral product, that can be used where it's needed, when it's needed, and in a preferred form is a potential highly differentiated treatment option for this patient population. Obviously, we believe LiberVant, utilizing our farm film technology, provides a preferred oral product that will be a meaningful improvement in treatment options available for these patients. Equestiv continues to prepare to launch this important product for epilepsy patients if granted market access by the FDA. Let's move on to epinephrine. Our next key value driver and priority is advancing our epinephrine product candidate for severe allergic reactions, including anaphylaxis, AQST109. AQUESTIV is advancing the clinical development of AQST109, the first and only orally delivered epinephrine product candidate to demonstrate results comparable to autoinjectors, such as EpiPen and AviQ. that are the current standard of care for the emergency treatment of severe allergic reactions. As we had committed in our last call, we announced in late February that the FDA has provided clearance for Equestiv's IND allowing clinical development in the United States. This is a necessary step to eventually moving the project toward an NDA filing expected in late 23 or early 24. As a reminder, the agency previously confirmed the 505 regulatory approval path as appropriate for AQST109. Additionally, we announced in late February positive top line results from part one of our EpiFast study evaluating AQST109. The product candidate continues to show rapid absorption and conversion of the prodrug to epinephrine in subjects achieving a median time to maximum concentration, or Tmax, of 13 1⁄2 minutes. We are obviously pleased with these results and have already begun part two of the study and expect to report top-line data before the end of the second quarter. We're excited that we've again shown pharmacokinetic results that demonstrate delivery of epinephrine with the absorption and conversion speed necessary for a rescue product of this kind. with 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 meaningful improvement in this group of patients' and caregivers' lives. We're looking forward to the continued development of AQST 109 and, as we've indicated previously, We expect to move forward with the manufacture of registration batches and to commence pivotal trials in the U.S. under the IMB before the end of 2022. Finally, our core business. Our core business continued to contribute new opportunities as well as cash in 2021. Our Suboxone business remains resilient and continues to contribute at a higher level than expected. Simpazan continued to perform and has now grown 12 straight quarters since its approval and launch. These will all contribute revenue and cash in 2022 and beyond. And as we just announced, we've signed a new licensing agreement with a China-based pharmaceutical company, Heisco, for the development, manufacture, and commercialization of Exervan in China. The deal contributes $7 million of upfront cash, manufacturing revenue with Equestiv as the sole supplier to Heisco, and double-digit royalties once the product is launched in China. In conclusion, as we progress through the first quarter of 2022, we're focused on advancing our proprietary products. We remain in close contact with the FDA regarding the application for LibriVamp, The FDA is continuing to evaluate the impact of orphan drug exclusivity on our NDA. We believe that LibriVant is an approvable product for safety and efficacy as evidenced by the completion of pre-notice requirements that I discussed earlier. We're prepared to launch immediately if granted U.S. market access. AQSD has advanced into Part 2, of the EpiFast study after we reported positive results from part one last month. Concurrently, the FDA's provided clearance for the IND, and we're on track to commence pivotal trials later this year. And finally, again, our ongoing business continues to perform well, and we look forward to delivering the strong results outlined in our release, which Ernie will discuss shortly.